PART I -– FINANCIAL INFORMATION

ITEM 1. UNAUDITED FINANCIAL STATEMENTS.

SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

~~Item 1. Interim Financial Statements.~~

~~CHURCHILL CAPITAL CORP II~~

~~CONDENSED BALANCE SHEET~~


	Successor		Successor
	April 30, 2022		January 31, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	75,571	$	154,672
Restricted cash		5,084		14,251
Accounts receivable, less reserves of approximately $300 and $600 as of April 30, 2022 and January 31, 2022 respectively		127,259		212,463
Prepaid expenses and other current assets		49,903		45,837
Total current assets		257,817		427,223
Property and equipment, net		17,633		18,084
Goodwill		1,179,926		871,504
Intangible assets, net		939,725		869,487
Right of use assets		17,090		19,925
Other assets		15,866		15,725
Total assets	$	2,428,057	$	2,221,948
LIABILITIES AND SHAREHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt	$	6,404	$	4,800
Borrowings under accounts receivable facility		27,990		74,629
Accounts payable		29,855		25,661
Accrued compensation		33,904		51,115
Accrued expenses and other current liabilities		46,550		51,017
Lease liabilities		5,486		6,895
Deferred revenue		297,447		331,605
Total current liabilities		447,636		545,722

Long-term debt		616,463		462,185
Warrant liabilities		18,093		28,199
Deferred tax liabilities		95,065		99,911
Long term lease liabilities		11,711		13,355
Deferred revenue - non-current		1,708		1,248
Other long-term liabilities		11,697		11,430
Total long-term liabilities		754,737		616,328
Commitments and contingencies		—		—
Shareholders’ equity:
Shareholders’ common stock - Class A common shares, $0.0001 par value: 375,000,000 shares authorized and 163,760,305 shares issued and outstanding at April 30, 2022 and 133,258,027 shares issued and outstanding at January 31, 2022		14		11
Additional paid-in capital		1,495,820		1,306,146
Accumulated deficit		(268,872)		(247,229)
Accumulated other comprehensive (loss) income		(1,278)		970
Total shareholders’ equity		1,225,684		1,059,898
Total liabilities and shareholders’ equity	$	2,428,057	$	2,221,948

~~JUNE 30, 2019~~

~~(UNAUDITED)~~

ASSETS
Current asset – cash $ 7,872
Deferred offering costs 317,110
Total Assets $ 324,982

LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accrued expenses $ 1,000
Accrued offering costs 99,982
Promissory note – related party 200,000
Total Current Liabilities 300,982

Commitments

Stockholder’s Equity
Preferred stock, $0.0001 par value; 1,000,000 authorized; none issued and outstanding —
Class A Common stock, $0.0001 par value; 200,000,000 shares authorized; none issued and outstanding —
Class B Common stock, $0.0001 par value; 20,000,000 shares authorized; 17,250,000 shares issued and outstanding⁽¹⁾ 1,725
Additional paid-in capital 23,275
Accumulated deficit (1,000 )
Total Stockholder’s Equity 24,000
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY $ 324,982

~~(1)~~

~~Included an aggregate of 2,250,000 shares that were subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters (see Note 5).~~

The accompanying notes are an integral part of ~~the unaudited condensed~~these consolidated financial statements.

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~~CHURCHILL CAPITAL CORP II~~

SKILLSOFT CORP.

UNAUDITED CONDENSED ~~STATEMENT~~CONSOLIDATED STATEMENTS OF OPERATIONS

~~FOR THE PERIOD FROM APRIL 11, 2019 (INCEPTION) THROUGH JUNE 30, 2019~~(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

~~(UNAUDITED)~~




	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
	April 30, 2022		April 30, 2021
Revenues:
Total revenues	$	163,914	$	91,701
Operating expenses:
Costs of revenues		47,634		24,521
Content and software development		22,773		16,607
Selling and marketing		44,883		28,502
General and administrative		29,720		12,362
Amortization of intangible assets		43,854		34,943
Recapitalization and acquisition-related costs		13,442		1,932
Restructuring		3,985		537
Total operating expenses		206,291		119,404
Operating loss		(42,377)		(27,703)
Other income (expense), net		1,003		(352)
Fair value adjustment of warrants		10,106		—
Interest income		166		10
Interest expense		(12,281)		(11,449)
Loss before benefit from income taxes		(43,383)		(39,494)
Benefit from income taxes		(21,740)		(2,089)
Net loss		(21,643)		(37,405)

Loss per share:
Class A and B – Basic and Diluted (SLH)		*		(9.35)
Ordinary – Basic and Diluted (Successor)		(0.15)		*
Weighted average common share outstanding:
Class A and B – Basic and Diluted (SLH)		*		4,000
Ordinary – Basic and Diluted (Successor)		142,209		*

*Not applicable

Formation costs $ 1,000
Net Loss $ (1,000 )

Weighted average shares outstanding, basic and diluted⁽¹⁾ 15,000,000

Basic and diluted net loss per common share $ (0.00 )

~~(1)~~

~~Excluded an aggregate of up to 2,250,000 shares that were subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters (see Note 5).~~

The accompanying notes are an integral part of ~~the unaudited condensed~~these consolidated financial statements.

~~CHURCHILL CAPITAL CORP II~~Table of Contents

SKILLSOFT CORP.
UNAUDITED CONDENSED ~~STATEMENT~~CONSOLIDATED STATEMENTS OF ~~CHANGES~~ COMPREHENSIVE LOSS

(IN ~~STOCKHOLDER’S EQUITY~~THOUSANDS)

~~FOR THE PERIOD FROM APRIL 11, 2019 (INCEPTION) THROUGH JUNE 30, 2019~~




	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
	April 30, 2022		April 30, 2021
Comprehensive loss:
Net loss	$	(21,643)	$	(37,405)
Other comprehensive loss — Foreign currency adjustment, net of tax		(2,248)		(228)
Comprehensive loss	$	(23,891)	$	(37,633)

~~(UNAUDITED)~~

Common Stock⁽¹⁾ Additional Paid Accumulated Total Stockholder’s
Shares Amount in Capital Deficit Equity
Balance – April 11, 2019 (inception) — $ — $ — $ — $ —

Issuance of Class B common stock to Sponsor⁽¹⁾ 17,250,000 1,725 23,275 — 25,000

Net loss — — — (1,000 ) (1,000 )

Balance – June 30, 2019 17,250,000 $ 1,725 $ 23,275 $ (1,000 ) $ 24,000

~~(1)~~

~~Included an aggregate of 2,250,000 shares that were subject to forfeiture if the over-allotment option was not exercised in full or in part by the underwriters (see Note 5).~~

The accompanying notes are an integral part of ~~the unaudited condensed~~these consolidated financial statements.

~~CHURCHILL CAPITAL CORP II~~Table of Contents

SKILLSOFT CORP.

UNAUDITED CONDENSED ~~STATEMENT~~CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~SHAREHOLDERS’ EQUITY

~~FOR THE PERIOD FROM APRIL 11, 2019 (INCEPTION) THROUGH JUNE 30, 2019~~(IN THOUSANDS, EXCEPT NUMBER OF SHARES)

~~(UNAUDITED)~~



	Ordinary Shares
								Accumulated Other
	Number of			Additional Paid-		Accumulated		Comprehensive			Total Shareholder's
	Shares	Par Value		In Capital		Deficit		Loss		Equity
Balance January 31, 2021 (Predecessor (SLH))	4,000,000	$	40	$	674,333	$	(93,722)	$	(682)	$	579,969
Translation adjustment	—		—		—		—		(228)		(228)
Net loss	—		—		—		(37,405)		—		(37,405)
Balance April 30, 2021 (Predecessor (SLH))	4,000,000		40		674,333		(131,127)		(910)		542,336

Cash Flows from Operating Activities:
Net loss $ (1,000 )
Changes in operating assets and liabilities:
Accrued expenses 1,000
Net cash used in operating activities —

Cash Flows from Financing Activities:
Proceeds from issuance of Class B common stock to Sponsor 25,000
Proceeds from promissory note – related party 200,000
Payment of offering costs (217,128 )
Net cash provided by financing activities 7,872

Net Change in Cash 7,872
Cash – Beginning of period —
Cash – End of period $ 7,872

Non-Cash investing and financing activities:
Deferred offering costs included in accrued offering costs $ 99,982

The accompanying notes are an integral part of ~~the unaudited condensed~~these consolidated financial statements.

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SKILLSOFT CORP.

~~CHURCHILL CAPITAL CORP II~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDER’S EQUITY

(IN THOUSANDS, EXCEPT NUMBER OF SHARES)


	Ordinary Shares
								Accumulated Other		Total
	Number of			Additional Paid-		Accumulated		Comprehensive		Shareholder's
	Shares	Par Value		In Capital		Deficit		Income		Equity
Balance January 31, 2022 (Successor)	133,258,027	$	11	$	1,306,146	$	(247,229)	$	970	$	1,059,898
Share-based compensation	—		—		6,898		—		—		6,898
Common stock issued	179,167		—		—		—		—		—
Shares repurchased for tax withholding upon vesting of restricted stock-based awarded	(51,316)		—		(309)		—		—		(309)
Common stock issued in conjunction with Codecademy acquisition	30,374,427		3		182,547		—		—		182,550
Fair value adjustment for equity awards attributed to Codecademy acquisition	—				538		—		—		538
Translation adjustment	—		—		—		—		(2,248)		(2,248)
Net loss	—		—		—		(21,643)		—		(21,643)
Balance April 30, 2022 (Successor)	163,760,305		14		1,495,820		(268,872)		(1,278)		1,225,684

The accompanying notes are an integral part of these consolidated financial statements.

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SKILLSOFT CORP.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(IN THOUSANDS)



	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
	April 30, 2022		April 30, 2021
Cash flows from operating activities:
Net loss	$	(21,643)	$	(37,405)
Adjustments to reconcile net loss to net cash provided by operating activities:
Share-based compensation		6,898		—
Depreciation and amortization		2,533		2,419
Amortization of intangible assets		43,854		34,943
Change in bad debt reserve		(320)		(293)
(Benefit from) provision for income taxes – non-cash		(26,434)		(3,355)
Non-cash interest expense		415		335
Fair value adjustment to warrants		(10,106)		—
Right-of-use asset		2,836		477
Changes in current assets and liabilities, net of effects from acquisitions:
Accounts receivable		84,107		87,373
Prepaid expenses and other current assets		(367)		(2,481)
Accounts payable		2,042		2,781
Accrued expenses, including long-term		(22,768)		(19,422)
Lease liability		(3,053)		(864)
Deferred revenue		(50,112)		(24,832)
Net cash provided by operating activities		7,882		39,676
Cash flows from investing activities:
Purchase of property and equipment		(1,613)		(386)
Internally developed software - capitalized costs		(2,286)		(1,494)
Acquisition of Codecademy, net of cash acquired		(198,633)		—
Net cash used in investing activities		(202,532)		(1,880)
Cash flows from financing activities:
Shares repurchased for tax withholding upon vesting of restricted stock-based awarded		(309)		—
Proceeds from issuance of term loans, net of fees		157,088		—
Principal payments on capital lease obligation		—		(263)
Proceeds from accounts receivable facility, net of borrowings		(46,639)		(2,876)
Principal payments on Term loans		(1,601)		(1,300)
Net cash provided by (used in) financing activities		108,539		(4,439)
Effect of exchange rate changes on cash and cash equivalents		(2,157)		(140)
Net (decrease) increase in cash, cash equivalents and restricted cash		(88,268)		33,217
Cash, cash equivalents and restricted cash, beginning of period		168,923		74,443
Cash, cash equivalents and restricted cash, end of period	$	80,655	$	107,660
Supplemental disclosure of cash flow information:
Cash and cash equivalents	$	75,571	$	105,004
Restricted cash		5,084		2,656
Cash, cash equivalents and restricted cash, end of period	$	80,655	$	107,660

The accompanying notes are an integral part of these consolidated financial statements.

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SKILLSOFT CORP.

UNAUDITED SUPPLEMENTAL DISCLOSURES OF CASH FLOWS INFORMATION

(IN THOUSANDS)



	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
	April 30, 2022		April 30, 2021
Supplemental disclosure of cash flow information and non-cash investing and financing activities:
Cash paid for interest	$	11,272	$	11,050
Cash paid for income taxes, net of refunds	$	(1,284)	$	838
Unpaid capital expenditures	$	260	$	212
Fair value of shares issued in connection with Codecademy acquisition	$	182,550	$	—

The accompanying notes are an integral part of these consolidated financial statements.

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SKILLSOFT CORP.

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~JUNE 30, 2019~~

~~(Unaudited)~~

~~Note 1 —~~(1) Organization and Description of ~~Organization~~Business

The Company

Skillsoft Corp. (“Successor”)

On October 12, 2020, Software Luxembourg Holding S.A. (“Software Luxembourg” or “Predecessor (SLH)”) and ~~Business Operations~~

Churchill Capital Corp II, a Delaware corporation (“Churchill”), entered into an Agreement and Plan of Merger (the “Skillsoft Merger Agreement”). Pursuant to the terms of the Skillsoft Merger Agreement, a business combination between Churchill and Software Luxembourg was effected through the merger of Software Luxembourg with and into Churchill (the “Skillsoft Merger”), with Churchill being the surviving company. At the effective time of the Skillsoft Merger (the “Effective Time”), (a) each Class A share of Software Luxembourg, with nominal value of $0.01 per share (“Skillsoft Class A Shares”), outstanding immediately prior to the Effective Time, was automatically canceled and Churchill issued as consideration therefor (i) such number of shares of Churchill’s Class A common stock, par value $0.0001 per share (the “Churchill Class A common stock”) as would be transferred pursuant to the Class A First Lien Exchange Ratio (as defined in the Skillsoft Merger Agreement), and (ii) Churchill’s Class C common stock, par value $0.0001 per share (the “Churchill Class C common stock”), as would be transferred pursuant to the Class C Exchange Ratio (as defined in the Skillsoft Merger Agreement), and (b) each Class B share of Software Luxembourg, with nominal value of $0.01 per share (“Skillsoft Class B Shares”), was automatically canceled and Churchill issued as consideration therefor such number of shares of Churchill Class A common stock equal to the Per Class B Share Merger Consideration (as defined in the Skillsoft Merger Agreement). Immediately following the Effective Time, Churchill redeemed all of the shares of Class C common stock issued to the holders of Skillsoft Class A Shares for an aggregate redemption price of (i) $505,000,000 in cash and (ii) indebtedness under the Existing Second Out Credit Agreement (as defined in the Skillsoft Merger Agreement), as amended by the Existing Second Out Credit Agreement Amendment (as defined in the Skillsoft Merger Agreement), in the aggregate principal amount equal to the sum of $20,000,000 to be issued by the Surviving Corporation (as defined in the Skillsoft Merger Agreement) or one of its subsidiaries, in each case, pro rata among the holders of Churchill Class C common stock issued in connection with the Skillsoft Merger.

As part of the closing of the Skillsoft Merger, the Company consummated PIPE investments and issued 53,000,000 shares of its Class A common stock and warrants to purchase 16,666,667 shares of its Class A common Stock for aggregate gross proceeds of $530 million. In connection with the consummation of these investments, the Company reclassified amounts recorded for stock subscriptions and warrants which previously had been accounted for as liabilities of $78.2 million as additional paid in capital.

On June 11, 2021 (“acquisition date”), Churchill completed its acquisition of Software Luxembourg, and changed its corporate name from Churchill to Skillsoft Corp. (the “Company”). In addition, the Company changed its fiscal year end from December 31 to January 31. Also on June 11, 2021, the Company completed the acquisition of Albert DE Holdings Inc. (“Global Knowledge” or “GK” and such acquisition, the “Global Knowledge Merger”), a worldwide leader in IT and professional skills development.

Software Luxembourg Holding (“Predecessor (SLH)”)

Software Luxembourg, a public limited liability company incorporated and organized under the laws of the Grand Duchy of Luxembourg, was ~~incorporated in Delaware~~established on ~~April 11, 2019. The Company was formed~~August 27, 2020 for the purpose of ~~effecting~~acquiring the ownership interest in Pointwell Limited (“Pointwell”), an Irish private limited company, through a ~~merger, capital stock exchange, asset acquisition, stock purchase,~~plan of reorganization ~~or similar~~under Chapter 11 subsequent to August 27, 2020.

Successor and Predecessor Periods

The Skillsoft Merger was considered a business combination ~~with one~~under ASC 805, Business Combinations and is accounted for using the acquisition method of accounting, whereby Churchill was determined to be the accounting acquirer and Software Luxembourg Holding was determined to be the predecessor for financial reporting purposes. References to “Successor” or ~~more businesses (the “Business Combination”)~~“Successor Company” relate to the consolidated financial position and results of operations of Skillsoft subsequent to June 11, 2021, the date when the acquisitions of Predecessor (SLH) and Global Knowledge were completed. References to “Predecessor (SLH)” relate to the consolidated financial position and results of operations of Software Luxembourg Holding between August 28, 2020 and June 11, 2021 (its last date of operations prior to the merger). Operating results for the acquired business on June 11, 2021 were credited to the Predecessor (SLH) in

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the accompanying consolidated statement of operations. The ~~Company has selected December 31 as its fiscal year end.~~funds received from the PIPE investments and transferred for the business combinations closing on June 11, 2021 were recorded in the Successor period of the consolidated statement of cash flows.

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

Description of Business

The Company ~~is an early stage~~provides, through its Skillsoft, Global Knowledge (“GK”), and ~~emerging growth company~~SumTotal brands, enterprise learning solutions designed to prepare organizations for the future of work, overcome critical skill gaps, drive demonstrable behavior-change, and ~~as such,~~unlock the ~~Company is subject to all~~potential in their people. Skillsoft offers a comprehensive suite of premium, original, and authorized partner content, featuring one of the ~~risks associated with early stage~~broadest and ~~emerging growth companies.~~deepest libraries of leadership & business, technology & developer, and compliance curricula. With access to a broad spectrum of learning options (including video, audio, books, bootcamps, live events, and practice labs), organizations can meaningfully increase learner engagement and retention. Skillsoft’s offerings are delivered primarily through Percipio, the Company’s award-winning, AI-driven, immersive learning platform purpose built to make learning easier, more accessible, and more effective.

~~As of June 30, 2019,~~References in the ~~Company had not commenced any operations. All activity for the period from April 11, 2019 (inception) through June 30, 2019 relates~~accompanying footnotes to the Company’s formation and the initial public offering (“Initial Public Offering”), which is described below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering.

The registration statement for the Company’s Initial Public Offering was declared effective on June 26, 2019 2019. On July 1, 2019, the Company consummated the Initial Public Offering of 69,000,000 units (the “Units” and, with respectfiscal year refer to the ~~shares~~fiscal year ended January 31 of ~~Class A common stock included in~~that year (e.g. fiscal 2022 is the Units sold, the “Public Shares”), which includes the full exercise by the underwriter of the over-allotment option to purchase an additional 9,000,000 Units, at $10.00 per Unit, generating gross proceeds of $690,000,000, which is described in Note 3.

Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 15,800,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Churchill Sponsor II LLC, a Delaware limited liability company (the “Sponsor”), generating gross proceeds of $15,800,000, which is described in Note 4.

Transaction costs amounted to $34,319,807 consisting of $12,212,000 of underwriting discount, $21,371,000 of deferred underwriting discount and $736,807 of other offering costs. In addition, $2,633,175 of cash was held outside of the Trust Account (as defined below) and is available for working capital purposes.

Following the closing of the Initial Public Offering on July 1, 2019, an amount of $690,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”) which will be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account, as described below, except that interest earned on the Trust Account can be released to the Company to fund working capital requirements, subject to an annual limit of $250,000 and to pay its tax obligations.

The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete an initial Business Combination having an aggregate fair market value of at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable) at the time of the agreement to enter into the initial Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”fiscal year ended January 31, 2022).

The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account ($10.00 per Public Share, plus any pro rata interest, net of amounts withdrawn for working capital requirements, subject to an annual limit of $250,000 and to pay its taxes (“permitted withdrawals”)). The per-share amount to be distributed to public stockholders who redeem their Public Shares will not be reduced by the deferred underwriting commissions the Company will pay to the underwriters (as discussed in Note 6). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.

The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law or stock exchange requirements and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation (the “Amended and Restated Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor and its permitted transferees have agreed to vote their Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.

~~CHURCHILL CAPITAL CORP II~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~JUNE 30, 2019~~

~~(Unaudited)~~

If the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% or more of the Public Shares, without the prior consent of the Company.

The Sponsor has agreed (a) to waive its redemption rights with respect to its Founder Shares and Public Shares held by it in connection with the completion of a Business Combination, (b) to waive its rights to liquidating distributions from the Trust Account with respect to its Founder Shares if the Company fails to consummate a Business Combination within the Combination Window (as defined below) and (c) not to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation that would affect the substance or timing of the Company’s obligation to redeem 100% of its Public Shares if the Company does not complete a Business Combination, unless the Company provides the public stockholders with the opportunity to redeem their shares in conjunction with any such amendment.

If the Company is unable to complete a Business Combination by July 1, 2021 (or October 1, 2021 if the Company has an executed letter of intent, agreement in principle or definitive agreement for a Business Combination by July 1, 2021) (the “Combination Window”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account including interest (net of permitted withdrawals and up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Window.

The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Window. However, if the Sponsor acquires Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Window. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Window and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).

In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party (other than the Company’s independent registered public accounting firm) for services rendered or products sold to the Company, or a prospective target business with which the Company has entered into a written letter of intent, confidentiality or similar agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) the amount per Public Share held in the Trust Account as of the liquidation of the Trust Account, if less than $10.00 per Public Shares due to reductions in the value of the trust assets, in each case net of permitted withdrawals. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account.

~~CHURCHILL CAPITAL CORP II~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~JUNE 30, 2019~~

~~(Unaudited)~~

~~Note 2 — Summary of Significant Accounting Policies~~

Basis of ~~Presentation~~Financial Statement Preparation

The accompanying condensed consolidated financial statements include the accounts of Skillsoft (Successor) and Software Luxembourg (Predecessor (SLH)) and their wholly owned subsidiaries. These financial statements are unaudited. However, in the opinion of management, the condensed consolidated financial statements reflect all normal and recurring adjustments necessary for their fair statement. Interim results are not necessarily indicative of results expected for any other interim period or a full year. We prepared the accompanying unaudited condensed consolidated financial statements ~~have been prepared~~ in accordance with the instructions for Form 10-Q and Article 8 of Regulation S-X and, therefore, include all information and footnotes necessary for a complete presentation of operations, comprehensive income (loss), financial position, changes in stockholders’ equity (deficit) and cash flows in conformity with accounting principles generally accepted in the United States of America (“U.S. GAAP”) ~~for interim financial information and in accordance with the instructions to Form 10-Q and Article 8 of Regulation S-X of the SEC. Certain information or footnote disclosures normally included in~~. The financial statements ~~prepared~~contained in ~~accordance with GAAP have been condensed or omitted, pursuant to the rules and regulations of the SEC for~~these interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, the accompanying unaudited condensed financial statements include all adjustments, consisting of a normal recurring nature, which are necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented.

~~The accompanying unaudited condensed~~ financial statements should be read in conjunction with the ~~Company’s prospectus for its Initial Public Offering as filed with~~audited consolidated financial statements and the ~~SEC on June 28, 2019, as well as~~notes thereto included in the Company’s ~~Current Reports~~Annual Report on Form ~~8-K, as filed with the SEC on July 2, 2019 and July 8, 2019. The interim results~~10-K for the ~~period from April 11, 2019 (inception) through June 30, 2019 are not necessarily indicative of the results to be expected for the period from April 11, 2019 (inception) through December~~fiscal year ended January 31, ~~2019 or for any future periods.~~

~~Emerging Growth Company~~

2022.

The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended, as modified by the Jumpstart Our Business Startups Act of 2012 (the ~~“JOBS~~“JOBS” Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.

Principles of Consolidation

~~Further, Section 102(b)(1)~~

The accompanying condensed consolidated financial statements include the accounts of the ~~JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that~~Company and its wholly owned subsidiaries. All material intercompany transactions and balances have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differencesbeen eliminated in ~~accounting standards used.~~consolidation.

Use of Estimates

The preparation of ~~the~~condensed consolidated financial statements in conformity with U.S. GAAP requires ~~the Company’s~~ management to make estimates and assumptions that affect the reported amounts of assets and liabilities and ~~disclosure~~disclosures of contingent assets and liabilities at the ~~date~~dates of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the ~~reporting period.~~reported periods. Actual results could differ from our estimates.

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~~Making estimates~~

(2) Summary of Significant Accounting Policies

The Company’s significant accounting policies are discussed in Note 2—Summary of Significant Accounting Policies to the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2022. There have been no changes to these policies during the three months ended April 30, 2022.

Recently Adopted Accounting Guidance

On October 28, 2021, the Financial Accounting Standards Boards (“FASB”) issued ASU 2021-08 – Business Combinations (Topic 805):Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”). ASU 2021-08 requires an acquirer in a business combination to recognize and measure deferred revenue from acquired contracts using the revenue recognition guidance in Accounting Standards Codification Topic 606, rather than the prior requirement to record deferred revenue at fair value. ASU 2021-08 allows for immediate adoption on a retrospective basis for all business combinations that have occurred since the beginning of the annual period that includes the interim period of adoption. The Company elected to adopt ASU 2021-08 early on a retrospective basis, effective at the beginning of the Successor period on June 11, 2021.

The adoption of ASU 2021-08 also resulted in the increase of goodwill by $123.5 million attributable to the acquisitions of Software Luxembourg, Global Knowledge and Pluma Inc. during the period ended July 31, 2021, as a result of the revised measurement of deferred revenue for acquisitions.

(3) Business Combinations

(a) Software Luxembourg Holdings S.A. (“Predecessor (SLH)”)

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

The Skillsoft Merger was considered a business combination under ASC 805, Business Combinations and was accounted for using the acquisition method of accounting, whereby Churchill was determined to be the accounting acquirer based on its rights to nominate six members of the initial Board of Directors, the size of its voting interest and its rights to appoint the Chief Executive Officer of Skillsoft Corp. and other members of management of the combined company prior to ~~exercise significant judgment. It~~closing.

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

The following summarizes the purchase consideration (in thousands):


Description	Amount
Class A common stock issued	$	258,000
Class B common stock issued*		48,375
Cash payments		505,000
Second Out Term Loan		20,000
Cash settlement of seller transaction costs		1,308
Total Purchase Price	$	832,683

^*Shares of Class B common stock were converted into Successor Class A common stock at the time of the Skillsoft Merger.

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The Company preliminarily recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (in thousands):



					Updated
	Preliminary Purchase				Preliminary Purchase
Description	Price Allocation		Adjustments ⁽¹⁾⁽²⁾		Price Allocation
Cash, cash equivalents and restricted cash	$	120,273	$	—	$	120,273
Current assets		118,847		706		119,553
Property and equipment		10,825		1,632		12,457
Intangible assets		769,799		(4,701)		765,098
Long term assets		18,629		—		18,629
Total assets acquired		1,038,373		(2,363)		1,036,010
Current liabilities		(49,056)		(350)		(49,406)
Debt, including accounts receivable facility		(552,977)		—		(552,977)
Deferred revenue		(123,300)		(114,047)		(237,347)
Deferred and other tax liabilities		(99,699)		15,920		(83,779)
Long term liabilities		(18,325)		1		(18,324)
Total liabilities assumed		(843,357)		(98,476)		(941,833)
Net assets acquired		195,016		(100,839)		94,177
Goodwill		637,667		100,839		738,506
Total purchase price	$	832,683	$	—	$	832,683

(1)

The increase in deferred revenue (and the corresponding increase to Goodwill by the same amount) is the result of the adoption of ASU 2021-08 in the quarter ended October 31, 2021.

(2)

All other changes represent measurement period adjustments attributable to the Company’s review of inputs and assumptions utilized in valuation models and additional information being obtained on preacquisition liabilities, since the initial purchase price allocation. The measurement period adjustments did not have a significant impact on the Company’s results of operations in prior periods.

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


Description	Amount		Life
Trademark/tradename – Skillsoft	$	84,700	indefinite
Trademark/tradename – SumTotal		5,800	9.6	years
Courseware		186,600	5	years
Proprietary delivery and development software		114,598	2.5-7.6	years
Publishing Rights		41,100	5	years
Customer relationships		271,400	12.6	years
Backlog		60,900	4.6	years
Total	$	765,098

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

Goodwill represents the excess of the purchase price over the net identifiable tangible and intangible assets acquired. The Company determined that the acquisition of the Predecessor (SLH) resulted in the recognition of goodwill primarily because the acquisition is expected to help the Company to meet its long-term operating profitability objectives through achievement of synergies. The majority of goodwill is not deductible for tax purposes.

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

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The Company incurred $9.8 million in acquisition-related expenses, which primarily consisted of transaction fees and legal, accounting and other professional services that are included in “Recapitalization and acquisition-related costs” in the audited consolidated statement of operations for the year ended January 31, 2022 and the related notes included in the Company’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 18, 2022. Approximately $4.3 million was reported in the period from February 1, 2021 to June 11, 2021 (Predecessor (SLH)) and $5.5 million was reported in the period from June 12, 2021 to January 31, 2022 (Successor).

(b) Albert DE Holdings, Inc. (“Global Knowledge” or “GK”)

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

The acquisition was accounted for as a business combination under ASC 805, Business Combinations, utilizing the acquisition method. Under the acquisition method, the acquisition date fair value of the consideration paid by the Company was allocated to the assets acquired and the liabilities assumed based on their estimated fair values.

The following summarized the purchase consideration (in thousands):


Description	Amount
Cash consideration	$	170,199
Warrants Issued		14,000
Joinder Term Loans		70,000
Cash settlement of seller transaction costs		4,251
Total Purchase Price	$	258,450

The Company preliminarily recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (in thousands):



					Updated
	Preliminary Purchase				Preliminary Purchase
Description	Price Allocation		Adjustments ⁽¹⁾⁽²⁾		Price Allocation
Cash, cash equivalents	$	17,524	$	157	$	17,681
Current assets		47,849		(2,347)		45,502
Property and equipment		5,531		1,625		7,156
Intangible assets		185,800		—		185,800
Long term assets		12,401		(3,106)		9,295
Total assets acquired		269,105		(3,671)		265,434
Current liabilities		(74,463)		10,944		(63,519)
Deferred revenue		(23,018)		(8,191)		(31,209)
Deferred and other tax liabilities		(16,934)		(8,571)		(25,505)
Long term liabilities		(4,248)		2,177		(2,071)
Total liabilities assumed		(118,663)		(3,641)		(122,304)
Net assets acquired		150,442		(7,312)		143,130
Goodwill		108,008		7,312		115,320
Total Purchase Price	$	258,450	$	—	$	258,450

(1)

The increase in deferred revenue (and the corresponding increase to Goodwill by the same amount) is the result of the adoption of ASU 2021-08 in the quarter ended October 31, 2021.

(2)

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


Description	Amount		Life
Trademark/tradename	$	25,400	indefinite
Courseware		1,500	3	years
Proprietary delivery and development software		2,500	0.6	years
Vendor relationships		43,900	2.6	years
Customer relationships		112,500	10.6	years
Total	$	185,800

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

Goodwill represents the excess of the purchase price over the net identifiable tangible and intangible assets acquired. The Company determined that the ~~estimate~~acquisition of GK resulted in the recognition of goodwill primarily because the acquisition is expected to help the Company to meet its long-term operating profitability objectives through achievement of synergies. The majority of goodwill is not 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.

The Company incurred $1.0 million in acquisition-related expenses, which primarily consisted of transaction fees and legal, accounting and other professional services that are included in “Recapitalization and acquisition-related costs” in the audited consolidated statement of operations for the year ended January 31, 2022 and the related notes included in the Company’s Annual Report on Form 10-K filed with the SEC on April 18, 2022. Approximately $1.0 million was reported in the period from June 12, 2021 to January 31, 2021 (Successor). The Company incurred additional $1.5 million in GK integration related expenses in the three months ended April 30, 2022, which is included in “Recapitalization and acquisition-related costs” in the accompanying consolidated statement of operations.

On April 4, 2022, the Company acquired Ryzac, Inc (“Codecademy”). Codecademy is 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 ASC 805, Business Combinations, utilizing the acquisition method. Under the acquisition method, the acquisition date fair value of the ~~effect~~consideration paid by the Company was allocated to the assets acquired and the liabilities assumed based on their estimated fair values.

The following summarizes the purchase consideration (in thousands):


Description	Amount
Cash payments	$	202,119
Class A common stock issued		182,550
Cash settlement of seller transaction costs and other		1,315
Total Purchase Price	$	385,984

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The Company preliminarily recorded the fair value of the purchase price to tangible and identifiable intangible assets acquired and liabilities assumed as follows (in thousands):



	Preliminary Purchase
Description	Price Allocation
Cash, cash equivalents and restricted cash	$	4,262
Current assets		3,671
Property and equipment		385
Intangible assets		112,000
Total assets acquired		120,318
Current liabilities		(4,290)
Deferred revenue		(18,396)
Deferred tax liabilities		(21,615)
Total liabilities assumed		(44,301)
Net assets acquired		76,017
Goodwill		309,967
Total purchase price	$	385,984

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


Description	Amount		Life
Tradename	$	44,000	13.8	years
Developed Technology		40,000	5	years
Content		18,000	5	years
Customer relationships		10,000	5.8	years
Total	$	112,000

Values and useful lives assigned to intangible assets were based on estimated value and use of these assets by a ~~condition, situation~~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 is expected to help the Company to meet its long-term operating profitability objectives through achievement of synergies. The goodwill is not 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.

The Company incurred $7.7 million in acquisition-related expenses, which primarily consisted of transaction fees and legal, accounting and other professional services that are included in “Recapitalization and acquisition-related expenses” in the accompanying consolidated statement of operations for three months ended April 30, 2022 (Successor).

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Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information summarizes the results of operations for the Company as though the acquisitions of Skillsoft, Global Knowledge and Codecademy had occurred on February 1, 2021 (in thousands):


Unaudited Pro Forma Statement of Operations
	Three months
	ended April 30,
	2022
Revenue	$	171,972
Net loss		(35,347)


Unaudited Pro Forma Statement of Operations
	Three months
	ended April 30,
	2021
Revenue	$	168,151
Net loss		(32,250)

The unaudited pro forma financial information does not assume any impacts from revenue, cost or ~~set~~other operating synergies that could be generated as a result of the acquisitions. The unaudited pro forma financial information is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved had the acquisitions been consummated on February 1, 2021.

Other Acquisitions

On June 30, 2021, the Company acquired Pluma, Inc. The acquisition enhances the Company’s leadership development offerings, adds a new modality to its blended learning model, and allows the Company to now offer a premium individualized coaching experience. Cash paid for Pluma in the Successor period was lower than the agreed upon purchase price of Pluma for $22 million due to a contractual holdback and working capital adjustment. The fair value of the net assets acquired included $17.8 million of goodwill and $8.7 million of identified intangible assets, which had a weighted average life of 7.4 years. The goodwill is not deductible for tax purposes. The business is reported as part of the Company’s Skillsoft reportable segment. Pro forma information and acquisition expenses have not been presented because such information is not material to the financial statements.

Measurement Period

The preliminary purchase price allocations for the acquisitions described above are based on initial estimates and provisional amounts. In accordance with ASC 805-10-25-13, if the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the acquirer shall report in its financial statements provisional amounts for the items for which the accounting is incomplete. During the measurement period, acquirer shall adjust the provisional amounts recognized at the acquisition date to reflect new information obtained about facts and circumstances that existed ~~at the date~~as of the ~~financial statements,~~acquisition date that, if known, would have affected the measurement of the amounts recognized as of that date. For the Skillsoft, Global Knowledge and Pluma acquisitions that occurred during the period ended January 31, 2022, the Company continues to refine its inputs and estimates inherent in (i) deferred income taxes, and (ii) the accuracy and completeness of contingent and other liabilities. For the Codecademy acquisition, which ~~management considered in formulating its estimate, could change~~occurred in the ~~near term due to one or more future confirming events. Accordingly,~~three months ended April 30, 2022, the ~~actual results could differ significantly from those estimates.~~Company is still evaluating and refining inputs and estimates inherent in (i) the valuation of intangible assets, (ii) deferred income taxes, (iii) valuation of tangible assets and (iv) the accuracy and completeness of liabilities.

~~Deferred offering costs~~

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~~Offering costs consist~~

(4) Intangible Assets

Intangible assets consisted of ~~legal, accounting, underwriting fees and other costs incurred through~~ the ~~balance sheet date that are directly~~following (in thousands):


	April 30, 2022 (Successor)						January 31, 2022 (Predecessor (SLH))
	Gross				Net		Gross					Net
	Carrying		Accumulated		Carrying		Carrying		Accumulated			Carrying
	Amount		Amortization		Amount		Amount		Amortization			Amount
Developed software/ courseware	$	376,066	$	66,005	$	310,061	$	315,856	$	47,323		$	268,533
Customer contracts/ relationships		396,400		22,167		374,233		386,400		12,902			373,498
Vendor relationships		43,900		25,492		18,408		43,900		21,219	��		22,681
Trademarks and trade names		51,300		1,234		50,066		7,300		780			6,520
Publishing rights		41,100		7,284		33,816		41,100		5,229			35,871
Backlog		60,900		15,051		45,849		60,900		6,554			54,346
Skillsoft trademark		84,700		—		84,700		84,700		—			84,700
Global Knowledge trademark		25,400		2,808		22,592		25,400		2,062			23,338
Total	$	1,079,766	$	140,041	$	939,725	$	965,556	$	96,069		$	869,487

Amortization expense related to the ~~Initial Public Offering. Offering costs amounting~~existing finite-lived intangible assets is expected to ~~$34,319,807~~be as follows (in thousands):


Fiscal Year	Amortization Expense
2023 (remaining 9 months)	$	142,028
2024		165,083
2025		141,573
2026		135,341
2027		87,270
Thereafter		183,730
Total	$	855,025

Amortization expense related to intangible assets in the aggregate was $43.9 million and $34.9 million for the three months ended April 31, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)), respectively.

Fresh-start Reporting for Intangible Assets (Predecessor (SLH))

In accordance with ASC 852, with the application of fresh-start reporting, the Company allocated its reorganization value to its individual assets based on their estimated fair values in conformity with ASC 805, including those of intangible assets.

Intangible assets were ~~charged to stockholders’ equity~~measured based upon ~~the completion~~estimates of the ~~Initial Public Offering.~~future performance and cash from the Successor Company at emergence. Values and useful lives assigned to intangible assets were based on estimated value and use of these assets by a market participant. The customer contracts/relationships and backlog were valued using the income approach. The trademarks and trade names were valued using the relief from royalty method. The income approach determines fair value by estimating the after-tax cash flows attributable to an identified asset over its useful life (Level 3 inputs) and then discounting these after-tax cash flows back to a present value. The developed software/courseware and publishing rights were valued using the replacement cost approach. The cost approach determines fair value by estimating the cost to replace or reproduce an asset at current prices and is reduced for functional and economic obsolescence.

Impairment of Goodwill and Intangible Assets

~~CHURCHILL CAPITAL CORP II~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill in fresh-start accounting results when the reorganization value of the emerging entity exceeds what can be attributed to specific tangible or identified intangible assets. The Company tests goodwill for impairment during the fourth quarter every year in accordance with ASC 350, Intangibles — Goodwill (“ASC 350”). In connection with the impairment evaluation, the Company may first consider qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not (i.e., a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. Performing a quantitative goodwill

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~~JUNE 30, 2019~~

~~(Unaudited)~~

impairment test is not necessary if an entity determines based on this assessment that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company fails or elects to bypass the qualitative assessment, the goodwill impairment test must be performed. This test requires a comparison of the carrying value of the reporting unit to its estimated fair value. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the difference is recorded, not to exceed the amount of goodwill allocated to the reporting unit. In determining reporting units, the Company first 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 of that component.

~~Income Taxes~~Intangible assets arising from business combinations are generally recorded based upon estimates of the future performance and cash flows from the acquired business. The Company uses an income approach to determine the estimated fair value of certain identifiable intangible assets including customer relationships and trade names and uses a cost approach for other identifiable intangible assets, including developed software/courseware. The income approach determines fair value by estimating the after-tax cash flows attributable to an identified asset over its useful life (Level 3 inputs) and then discounting these after-tax cash flows back to a present value. The cost approach determines fair value by estimating the cost to replace or reproduce an asset at current prices and is reduced for functional and economic obsolescence. Developed technology represents patented and unpatented technology and know-how. Customer contracts and relationships represents established relationships with customers, which provide a ready channel for the sale of additional content and services. Trademarks and tradenames represent acquired product names and marks that the Company intends to continue to utilize.

The Company ~~follows~~reviews 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 are not 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. The Company reviews indefinite-lived intangible assets, including goodwill and ~~liability method~~certain trademarks, during the fourth quarter of ~~accounting~~each year for ~~income taxes~~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.

During the three months ended April 30, 2022, the Global Knowledge business experienced a decline in bookings compared to the corresponding period in the prior year, which will likely lead to lower revenue for the reporting unit for the three months ended July 31, 2022 due to the lag of bookings converting into GAAP revenue. When considering whether events or changes in circumstances might indicate that the carrying amount of Global Knowledge reporting unit goodwill and other intangible assets may not be recoverable, the Company concluded that no such events and changes in circumstances were present during the three months ended April 30, 2022 since its long-term outlook for the Global Knowledge business has not changed as the Company continues to invest in its salesforce and product offerings. Based on these considerations, management does not believe there are indicators of impairment as of April 30, 2022. In the event the Company continues to experience operating performance in its Global Knowledge business that is below its expectations in future periods, such factors could result in a decline in the fair value of the reporting unit, and the Company may be required to record impairments of goodwill and other identified intangible assets.

A roll forward of goodwill is as follows:


Description	Skillsoft		SumTotal		GK		Consolidated
Goodwill, net January 31, 2022 (Successor)	$	680,500	$	75,693	$	115,311	$	871,504
Foreign currency translation adjustment		(102)		(99)		(730)		(931)
Acquisition of Codecademy		309,967		—		—		309,967
Measurement period adjustments		—		—		(614)		(614)
Goodwill, net April 30, 2022 (Successor)	$	990,365	$	75,594	$	113,967	$	1,179,926

As of April 30, 2022 and January 31, 2022, there were no accumulated impairment losses for the Skillsoft, SumTotal or Global Knowledge segments.

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(5) Taxes

For the three months ended April 30, 2022 (Successor), the Company recorded a tax benefit of $21.7 million on pretax loss of $43.4 million. The tax benefit reflects the impact of non-deductible items, current period changes in the Company’s valuation allowance on its deferred tax assets and the impact of foreign rate differential.

For the three months ended April 30, 2021 (Predecessor (SLH)), the Company recorded a tax benefit of $2.1 million on pretax loss of $39.5 million. The tax benefit reflects current period changes to unrecognized tax positions, foreign rate differential, and changes in the Company’s valuation allowance on its deferred tax assets.

(6) Restructuring

In connection with strategic initiatives implemented during the period ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)), the Company’s management approved and initiated plans to reduce its cost structure and better align operating expenses with existing economic conditions and the Company’s operating model. The Company recorded $4.0 million and $0.5 million of restructuring charges during the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)), respectively, which is included in the statement of operations as restructuring. Substantially all of this charge represents the severance costs of terminated employees.

(7) Leases, Commitments and Contingencies

Leases

The Company measured Skillsoft and Global Knowledge’s legacy lease agreements as if the leases were new at the acquisition date and applied the provisions of Topic 842. This resulted in the recognition of right-of-use (ROU) assets and lease liabilities of $17.1 million and $17.2 million, respectively, as of April 30, 2022. All leases are classified as operating leases, except an equipment lease agreement for the Company’s hosting services and storage, which qualifies as a finance lease under ~~ASC 740, “Income Taxes.” Deferred tax~~U.S. GAAP, and ended on December 31, 2021.

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 of one year to twelve 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.

Operating lease ROU assets and 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 do not provide an implicit rate, the Company uses an estimated incremental borrowing rate in determining the present value of future payments. The Company elected the package of practical expedients permitted under the transition guidance which were applied consistently to all of the Company’s leases that commenced before the acquisition date. The Company also elected the short-term lease recognition exemption for ~~the estimated future tax consequences attributable to differences between the financial statements carrying amounts of existing~~all qualifying leases, where ROU assets and ~~liabilities and their respective tax bases. Deferred tax assets and~~lease liabilities are ~~measured using enacted tax rates expected to apply to taxable income~~not recognized for leases with the remaining terms of less than one year.

The operating leases are included in the ~~years in which those temporary differences are expected to be recovered or settled. The effect~~caption “Right of use assets”, “Lease Liabilities”, and “Long-term lease liabilities” on ~~deferred tax assets and liabilities of a change in tax rates is recognized in income in~~ the ~~period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.~~

ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statements recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penaltiesCompany’s consolidated balance sheets as of ~~June~~April 30, ~~2019.~~2022. The ~~Company~~weighted-average remaining lease term of the Company’s operating leases is ~~currently not aware~~5.8 years as of ~~any issues under review that could result in significant~~April 30, 2022. Lease costs for minimum lease payments ~~accruals or material deviation from its position.~~are recognized on a straight-line basis over the lease term. The ~~Company is subject to income tax examinations by major taxing authorities since inception.~~

~~The provision for income taxes was deemed to be immaterial~~lease costs were $1.4 million and related cash payments were $1.6 million for the period from February 1, 2021 to April ~~11, 2019 (inception) through June~~ 30, ~~2019.~~

~~Net Loss Per Common Share~~

Net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period, excluding shares of common stock subject to forfeiture. Weighted average shares2021 (Predecessor (SLH)). The lease costs were ~~reduced for the effect of an aggregate of 2,250,000 shares of common stock that~~$2.4 million and related cash payments were subject to forfeiture if the over-allotment option was not exercised by the underwriters (see Note 7). At June 30, 2019, the Company did not have any dilutive securities and other contracts that could, potentially, be exercised or converted into shares of common stock and then share in the earnings of the Company. As a result, diluted loss per share is the same as basic loss per share$2.6 million for the period ~~presented.~~from February 1, 2022 to April 30, 2022 (Successor). Lease costs are included within 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 and the finance lease related cash payments were included in the financing cash flows on the consolidated statements of cash flows. Short-term lease costs and variable lease costs are not material.

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~~Concentration~~

The table 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 ~~Credit Risk~~April 30, 2022 (Successor):


Fiscal Year Ended January 31 (in thousands):	Operating Leases
2023 (excluding 3 months ended April 30, 2022)	$	5,098
2024		4,618
2025		3,193
2026		1,388
2027		1,130
Thereafter		4,699
Total future minimum lease payments		20,126
Less effects of discounting		(2,929)
Total lease liabilities	$	17,197

Reported as of April 30, 2022
Lease liabilities	$	5,486
Long-term lease liabilities		11,711
Total lease liabilities	$	17,197

~~Financial instruments that potentially subject~~Litigation

From time to time, the Company is a party to ~~concentrations~~or may be threatened with litigation in the ordinary course of ~~credit risk consist~~its business. The Company regularly analyzes current information, including, as applicable, the Company’s defense and insurance coverage and, as necessary, provides accruals for probable and estimable liabilities for the eventual disposition of these matters.

On March 14, 2022, a ~~cash account~~putative Company stockholder filed a complaint in ~~a financial institution, which, at times, may exceed~~ the ~~Federal Depository Insurance Coverage~~United States District Court for the Eastern District of ~~$250,000. At June 30, 2019,~~New York, captioned Newton v. Skillsoft Corp., et al., No. 1:22-cv-01383 (E.D.N.Y.), against the Company and the members of its Board of Directors. The complaint generally alleges that the definitive proxy statement filed by the Company with the SEC in connection with the Codecademy acquisition contained misstatements and omissions in violation of Section 14(a) of the Securities Exchange Act of 1934 and Rule 14a-9 promulgated thereunder by the SEC. The complaint seeks, among other things, equitable relief and an award of attorneys’ fees and expenses. In addition, the Company has received six demand letters from putative stockholders asserting similar claims.

The items noted above, and any potential liability, do not currently meet the accounting criteria of probable and estimable. Therefore the Company has not ~~experienced losses on this account~~accrued any related liability as of April 30, 2022.

Guarantees

The Company’s software license arrangements and ~~management believes~~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 a third 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 isfails to meet those levels for an agreed upon period of time.

To date, the Company has not ~~exposed~~incurred any material costs as a result of such indemnifications or commitments and has not accrued any liabilities related to ~~significant risks on~~ such ~~account.~~

~~Fair Value of Financial Instruments~~

The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements and Disclosures,” approximates the carrying amounts representedobligations in the accompanying ~~balance sheet, primarily due to their short-term nature.~~

~~Recent Accounting Pronouncements~~

~~Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed~~consolidated financial statements.

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~~Note 3 — Public Offering~~

(8) Long-Term Debt

~~Pursuant~~Debt consisted of the following (in thousands):


	Successor		Successor
	April 30, 2022		January 31, 2022
Term Loan - current portion	$	6,404	$	4,800
Current maturities of long-term debt	$	6,404	$	4,800

Term Loan - long-term portion		630,795		474,000
Less: Original Issue Discount - long-term portion		(9,294)		(6,724)
Less: Deferred Financing Costs - long-term portion		(5,038)		(5,091)
Long-term debt	$	616,463	$	462,185

Term Loan (Successor)

On July 16, 2021, Skillsoft Finance II, Inc. (“Skillsoft Finance II”), a subsidiary of Skillsoft Corp., entered into a Credit Agreement (the “Credit Agreement”), by and among Skillsoft Finance II, as borrower, Skillsoft Finance I, Inc. (“Holdings”), the lenders party thereto and Citibank, N.A., as administrative agent and collateral agent, pursuant to which the ~~Initial Public Offering,~~lenders provided a $480 million term loan facility (the “Term Loan Facility”) to Skillsoft Finance II, the ~~Company sold 69,000,000 Units at a purchase price~~proceeds of ~~$10.00 per Unit,~~ which, ~~includes the full exercise by the underwriter of its option~~together with cash on hand, were used to purchase an additional 9,000,000 Units at $10.00 per Unit. Each Unit consists of one share of Class A common stock and one-third of one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holderrefinance existing debt. The Term Loan Facility is scheduled to ~~purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).~~mature on July 16, 2028.

~~Note 4 — Private Placement~~

~~Simultaneously~~In connection with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 15,800,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant, for an aggregate purchase price of $15,800,000. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $11.50 per share. The proceeds from the sale of the Private Placement Warrants were addedCodecademy acquisition, Skillsoft Finance II entered into Amendment No. 1 to the ~~proceeds from~~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 parties thereto as Term B-1 Lenders, which amended the Credit Agreement, as amended by the First Amendment, the “Amended Credit Agreement”.

The First Amendment provides for the incurrence of up to $160 million of Term B-1 Loans (the “Term B-1 Loans”) under the Amended Credit Agreement. In addition, the First Amendment, among other things, (a) provides for early opt-in to Secured Overnight Financing Rate (SOFR )for the existing term loans under the Credit Agreement (such existing term loans together with the Term B-1 Loans, the “Initial Term Loans”) and (b) provides for the applicable margin for the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Window, the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the Private Placement Warrants will expire worthless. There will be no redemption rights or liquidating distributions from the Trust AccountTerm 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 ~~Private Placement Warrants.~~Term Loan Facility on April 4, 2022. The Company used the net proceeds and cash on hand for the closing of the Codecademy acquisition on April 4, 2022.

The refinancing was accounted for as a modification for certain lenders and an extinguishment for other lenders and debt issuance costs and lender fees were accounted for in proportion to whether the related principal balance was considered modified or extinguishments. Accordingly, both newly incurred and deferred financing costs and original issuance discounts of $0.1 million and $2.8 million, respectively, will be amortized as additional interest expense over the term of the Term Loan. Furthermore, $3.9 million of third-party costs incurred were recognized as interest expenses in the accompanying statement of operations for the three months ended April 30, 2022.

Prior to the maturity thereof, the Initial Term Loans will be subject to quarterly amortization payments of 0.25% of the principal amount. The Amended Credit Agreement requires that any prepayment of the Initial Term Loans in connection with a repricing transaction shall be subject to (i) a 2.00% premium on the amount of Initial Term Loans prepaid if such prepayment occurs prior to July 16, 2022 and (ii) a 1.00% premium on the amount of Initial Term Loans prepaid in connection with a Repricing Transaction (as defined in the Amended Credit Agreement), if such prepayment occurs on or after July 16, 2022 but on or prior to January 16, 2023. The proceeds of the Term B-1 Loans were used by the Company to finance, in part, the Codecademy acquisition, and to pay costs, fees, and expenses related thereto.

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~~CHURCHILL CAPITAL CORP II~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

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 those assets of each subsidiary guarantor.

~~JUNE~~

Loan Parties are subject to various affirmative and negative covenants and reporting obligations under the Term Loan Facility. These include, among others, 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 April 30, ~~2019~~2022, the Company is in compliance with all covenants.

~~(Unaudited)~~ The Company’s debt outstanding as of April 30, 2022 matures as shown below (in thousands):


Fiscal year ended January 31:
2023	$	4,803
2024		6,404
2025		6,404
2026		6,404
2027		6,404
Thereafter		606,780
Total payments		637,199
Less: Current portion		(6,404)
Less: Unamortized original issue discount and issuance costs		(14,332)
Long-term portion	$	616,463

~~Note 5 — Related Party Transactions~~

Accounts Receivable Facility (Predecessor and Successor)

~~Founder Shares~~

On December 20, 2018, the Company entered into a $75.0 million receivables credit agreement, with a termination date of the earliest of 5 years from closing or 45 days before the revolving credit facility maturity or 180 days before the maturity of any term indebtedness greater than $75 million. There are four classes of available receivables for sale with advance rates between 50.0% and 85.0%. The lenders require the Company to deposit receipts from sold receivables to a restricted concentration account. Receivables that have been sold to the lenders must be transferred to the restricted concentration account within two business days of being collected by the Company. The Company accounts for these transactions as borrowings, as the assets being transferred contain the rights to future revenues. Under these agreements, the Company receives the net present value of the accounts receivable balances being transferred. The interest rate on borrowings outstanding under these agreements was 3.7% at April 30, 2022. Borrowings and repayments under these agreements are presented as cash flows from financing activities in the accompanying consolidated statements of cash flows.

~~In May~~

On September 19, 2019, the ~~Sponsor purchased 8,625,000 shares (the “Founder Shares”)~~Company amended the receivables credit agreement to include Class “B” lending. This increased the facility borrowing capacity to up to $90.0 million. In conjunction with this, it increased the advance rate to 95% across the four classes of available receivables. All other terms and conditions remained materially the same.

On August 27, 2020, the Company amended its accounts receivable facility. In connection with the amendment, additional capacity under the previous accounts receivable facility which had been extended by the private equity sponsor of the Company’s ~~Class B common stock~~prior owner was eliminated, reducing the maximum capacity of the facility from $90 million to $75 million. The maturity date for ~~an aggregate price~~the remaining $75 million facility was extended to the earlier of ~~$25,000. On June 7, 2019,~~(i) December 2024 or (ii) 90 days prior to the maturity of any corporate debt. The Company submits a monthly reconciliation on each month’s settlement date detailing what was collected from the prior months borrowing base and what receivables are being sold during the new borrowing base period to replenish them. If additional receivables are sold to replenish receipts, the funds from the concentration account will be returned to the Company ~~effected a stock dividend~~from the restricted concentration account by the administration agent. The reserve balances were $3.9 million at ~~one-third~~April 30, 2022 and are classified as restricted cash on the balance sheet.

Table of ~~one~~Contents

(9) Shareholders’ Equity

Skillsoft Corp. (Successor)

Capitalization

As of April 30, 2022, the Company’s authorized share capital consisted of Class B common stock for each outstanding share of Class B common stock, resulting in an aggregate of 11,500,000 Founder Shares outstanding. On June 26, 2019, the Company effected a further stock dividend of one-half of a share of Class B common stock for each outstanding share of Class B common stock, resulting in the Sponsor holding an aggregate of 17,250,000 Founder Shares. All share and per-share amounts have been retroactively restated to reflect the stock dividend. The Founder Shares will automatically convert into375,000,000 shares of Class A common stock, ~~upon consummation of a Business Combination on a one-for-one basis, subject to certain adjustments, as described in Note 7.~~

The Founder Shares included an aggregate of up to 2,250,000 shares subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the Sponsor would own, on an as-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor does not purchase any Units in the Initial Public Offering). As a result of the underwriters’ election to fully exercise their over-allotment option, 2,250,000 Founder Shares are no longer subject to forfeiture.

The Sponsor has agreed, subject to limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination or (B) the date on which the Company completes a liquidation, merger, stock exchange, reorganization or similar transaction after a Business Combination that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the closing price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, the Founder Shares will be released form the lock-up.

~~Promissory Note — Related Party~~

On April 29, 2019, the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering pursuant to a promissory note (the “Promissory Note”). The Promissory Note was non-interest bearing and payable on the earlier of December 31, 2019 or the completion of the Initial Public Offering. At June 30, 2019, borrowings outstanding under the Promissory Note amounted to $200,000. The Promissory Note was repaid in full upon the consummation of the Initial Public Offering on July 1, 2019.

~~Administrative Support Agreement~~

The Company entered into an agreement whereby, commencing on June 26, 2019 through the earlier of the Company’s consummation of a Business Combination and its liquidation, the Company will pay an affiliate of the Sponsor a total of $20,000 per month for office space, administrative and support services.

~~Advisory Fee~~

The Company may engage M. Klein and Company, LLC, an affiliate of the Sponsor, or another affiliate of the Sponsor, as its lead financial advisor in connection with a Business Combination and may pay such affiliate a customary financial advisory fee in an amount that constitutes a market standard financial advisory fee for comparable transactions.

~~Related Party Loans~~

In order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). If the Company completes a Business Combination, the Company would repay the Working Capital Loans out of the proceeds of the Trust Account released to the Company. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. Except for the foregoing, the terms of such Working Capital Loans, if any, have not been determined and no written agreements exist with respect to such loans. The Working Capital Loans would either be repaid upon consummation of a Business Combination, without interest, or, at the lender’s discretion, up to $1,500,000 of such Working Capital Loans may be convertible into warrants at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants.

~~CHURCHILL CAPITAL CORP II~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~JUNE 30, 2019~~

~~(Unaudited)~~

~~Note 6 — Commitments~~

~~Registration Rights~~

Pursuant to a registration rights agreement entered into on June 26, 2019, the holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any3,840,000 shares of Class AC common stock ~~issuable upon the exercise of the Private Placement Warrants or warrants that may be issued upon conversion of Working Capital Loans~~ and upon conversion of the Founder Shares) will be entitled to registration rights requiring the Company to register such securities for resale (in the case of the Founder Shares, only after conversion to Class A common stock). The holders of these securities will be entitled to make up to three demands, excluding short form demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to the completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. The Company will bear the expenses incurred in connection with the filing of any such registration statements.

~~Underwriting Agreement~~

The Company granted the underwriters a 45-day option to purchase up to 9,000,000 additional Units to cover over-allotments at the Initial Public Offering price, less the underwriting discounts and commissions. On July 1, 2019, the underwriters elected to fully exercise their over-allotment option to purchase 9,000,000 Units at a purchase price of $10.00 per Unit.

The underwriters are entitled to a deferred fee of $21,371,000 in the aggregate. The deferred fee will be waived by the underwriters in the event that the Company does not complete a Business Combination, subject to the terms of the underwriting agreement. On July 1, 2019, the underwriters agreed to waive the upfront and deferred underwriting discount on 7,940,000 units, resulting in a reduction of the upfront and deferred underwriting discount of $1,588,000 and $2,779,000, respectively.

~~Note 7 — Stockholder’s Equity~~

~~Preferred Stock~~ ~~— The Company is authorized to issue 1,000,000~~10,000,000 shares of preferred stock, with a par value of $0.0001 ~~per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board~~each. As of ~~directors. At June~~April 30, ~~2019, there were no shares of preferred stock issued or outstanding.~~

~~Common Stock~~

~~Class A Common Stock~~ ~~— The Company is authorized to issue 200,000,000~~2022, 163,760,305 shares of Class A common stock ~~with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At June 30, 2019, there~~ were ~~no shares of Class A common stock~~ issued ~~or outstanding.~~

~~Class B Common Stock~~ — The Company is authorized to issue 20,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At June 30, 2019, there were 17,250,000 shares of Class B common stock issued and outstanding.

~~Holders~~The number of Class B common stock will have the right to elect all of the Company’s directors prior to a Business Combination. Holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders except as required by law.

The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on a one-for-one basis, subject to adjustment. In the case that additionalauthorized shares of Class A common stock or ~~equity-linked securities, are issued or deemed issued in excess~~preferred stock authorized for issuance may be increased by the affirmative vote of the ~~amounts offered in the Initial Public Offering and related to the closing~~holders of a ~~Business Combination,~~majority in voting power of the ~~ratio at which shares~~Company’s capital stock entitled to vote thereon. Except as required by law, holders of share of Class BC common stock ~~shall convert into shares~~are not entitled to vote any such shares.

Subject to applicable law, the Company may declare dividends to be paid ratably to holders of Class A common stock ~~will~~out of the Company’s assets that are legally available to be ~~adjusted (unless~~distributed as dividends in the discretion of the Company’s board of directors. Holders of Class C common stock are generally not entitled to dividends.

Warrants

In connection with the formation of the Company and subsequent acquisitions of Software Luxembourg and Global Knowledge, warrants to purchase common stock were issued to investors, sellers of Global Knowledge and an executive of the Company. Warrants that are not subject to ASC 718, Stock Compensation and (i) contained features that could cause the warrant to be puttable to the Company for cash or (ii) had terms that prevented the conversion of the warrant from being fixed in all circumstances, are classified as a liability on the Company’s balance sheet and measured at fair value, with changes in fair value being recorded in the income statement, whereas all other warrants meet the equity scope exception and are classified as equity and not remeasured.

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

Underlying

Fair Value

Common

Strike

Redemption

Expiration

at April 30,

Type

Shares

Price

Date

2022

Private Placement Warrants – Sponsor

16,300

11.50

None

6/11/26

18,093

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


	Underlying
	Common	Strike		Redemption		Expiration
Type	Shares	Price		Price		Date
Public Warrants	23,000	$	11.50	$	18.00	6/11/26
Private Placement Warrants (PIPE)	16,667	$	11.50	$	18.00	6/11/26
Private Placement Warrants (Global Knowledge)	5,000	$	11.50		None	10/12/25
Private Placement Warrants (CEO)	1,000	$	11.50		None	6/11/26
Total	45,667

Software Luxembourg Holding S.A. (Predecessor (SLH))

Reorganization

On August 27, 2020 Pointwell (which had been a direct wholly owned subsidiary of Evergreen Skills Lux S.à r.l.), and certain of its subsidiaries, completed a reorganization. As a result of the reorganization, ownership of Pointwell was transferred to the Company’s lenders and no consideration or right to future consideration was provided to the former equity holders of Pointwell. In addition, the shared-based compensation plans of Pointwell were cancelled with no consideration provided.

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In Settlement of Predecessor’s first and second lien debt obligations, the holders of the Predecessors first lien received a ~~majority~~total of 3,840,000 Class A common shares. The Predecessor’s second lien holders received a total of 160,000 Class B common shares and a total of 705,882 warrants to purchase additional common shares. The predecessor warrants were valued using a probability-based approach that considered management’s estimate of the ~~outstanding shares~~probability of (i) a sale of the company that met certain conditions that caused the warrants to be cancelled for no consideration, (ii) a sale of the company that did not meet certain conditions that caused the warrants to be cancelled for no consideration and (iii) warrants being held to maturity, with the last two scenarios utilizing a Black-Scholes model to estimate fair value.

The warrants included a provision whereby, in the event of a sale of the Predecessor meeting certain conditions (“Favored Sale”), the warrants would be cancelled for no consideration, however, in such an event, the holders of Class B shares would receive a higher share of any consideration paid in the form of common stock ~~agree to waive~~by the acquiring company. The conditions of the Favored Sale were established in anticipation of a Churchill merger and mirror the ultimate agreement executed on October 12, 2020. The Board of Directors and required level of warrant holders amended the warrants such ~~adjustment with respect to any such issuance or deemed issuance) so~~ that the ~~number~~deadline for a Favored Sale to occur was extended to October 12, 2020. An amendment to extend the date by which a Favored Sale could occur represented a modification to both the warrants and the participation right held by the Class B holders. Management measured the impact of ~~shares~~the modification to both the freestanding warrants and the participation right held by the Class B holders by comparing their fair values immediately before and after the modification. The net impact of the increase in the value of the participation right held by Class B stockholders, of $13.3 million, and the decrease in the value of the warrants, of $7.4 million, is reflected as a decrease of $5.9 million in earnings attributable to Class A common ~~stock issuable upon conversion of all shares of~~stockholders and an increase to $5.9 million earnings attributable to Class B common ~~stock will equal,~~stockholders for earnings per share purposes. The $7.4 million decrease in the ~~aggregate, on~~value of warrants is reflected as a capital contribution and is reflected as an ~~as-converted basis, 20%~~increase to additional-paid-in-capital in the period from August 28, 2020 through October 31, 2020 (Predecessor SLH).

As a result of the ~~sum~~Skillsoft Merger, the warrants were terminated for no consideration on June 11, 2021.

Share Capital

As of January 31, 2021 the Predecessor’s authorized share capital consisted of 1,000,000,000 common shares with a par value $0.01 each. This consists of 800,000,000 Class A shares and 200,000,000 Class B shares. As of January 31, 2021, 4,000,000 common shares were issued and outstanding. This consists of 3,840,000 Class A shares and 160,000 Class B shares.

(10) Stock-based compensation

Equity Incentive Plans

In June 2021, Skillsoft Corp adopted the 2020 Omnibus Incentive Plan (“2020 Plan”) and issued Stock Options, RSUs and PSUs to employees. The 2020 Plan provides for the grant of Incentive Stock Options, Nonqualified Stock Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Other Equity-Based Award and Cash-Based Incentive Awards to employees, directors, and consultants of the Company. Under the 2020 Plan, 13,105,902 shares were initially made available for issuance. The 2020 Plan includes an annual increase on January 1 each year beginning on January 1, 2022, in an amount equal to 5.0% of the total number of ~~all~~ shares of common stock outstanding ~~upon the completion~~on December 31 of the ~~Initial Public Offering plus all shares~~preceding calendar year. The Compensation Committee may act prior to January 1 of ~~Class A common stock and equity-linked securities issued~~a given year to provide that there will be no January 1 increase for such year or ~~deemed issued in connection with~~that the increase for such year will be a ~~Business Combination (net of the~~lesser number of shares of ~~Class A~~ common stock redeemed in connection with a Business Combination), excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination, any private placement-equivalent warrants issued, or to be issued, to any seller in a Business Combination.

~~CHURCHILL CAPITAL CORP II~~

~~NOTES TO CONDENSED FINANCIAL STATEMENTS~~

~~JUNE 30, 2019~~

~~(Unaudited)~~

~~Warrants~~ ~~— Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation~~than 5.0% of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.

The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the Company satisfying its obligations with respect to registration. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available.

The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC, and within 60 business days following a Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its reasonable best efforts to qualify the shares under applicable blue sky laws to the extent an exemption is not available.

~~Once the warrants become exercisable, the Company may redeem the Public Warrants:~~

	•	~~in whole and not in part;~~
	•	~~at a price of $0.01 per warrant;~~
	•	~~upon a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period, to each warrant holder; and~~
	•	if, and only if, the closing price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which we send the notice of redemption to the warrant holders.

If and when the 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 Public 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 andtotal number of shares of ~~Class A~~ common stock ~~issuable upon exercise~~outstanding on December 31 of the ~~warrants may~~preceding calendar year. As of April 30, 2022 a total of 9,958,495 shares of common stock were available for issuance under the 2020 Plan.

Stock Options

Under the 2020 Plan all employees, directors and consultants are eligible to receive incentive share options or non-statutory share options. The options generally vest over four years and have a term of ten years. Vested options under the plan generally expire not later than 90 days following termination of employment or service or twelve months following an optionees’ 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.

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The following table summarizes the stock option activity for the three months ended April 30, 2022:


				Weighted
		Weighted		Average
		Average		Remaining	Aggregate
		Exercise		Contractual	Intrinsic Value
	Shares	Price		Term (Years)	(In thousands)
Outstanding, January 31, 2022	2,825,752	$	10.76	9.4
Granted	—		—	—
Exercised	—		—	—
Forfeited	—		—	—
Expired	—		—	—
Outstanding, April 30, 2022	2,825,752	$	10.76	9.2	$	—
Vested and Exercisable, April 30, 2022	187,500	$	10.75		$	—

The total unrecognized equity-based compensation costs related to the stock options was $7.6 million, which is expected to be ~~adjusted in~~recognized over a weighted-average period of 3.2 years.

The grant date fair value of the stock options was determined using the Black Scholes model with the following assumptions:


	Three Months Ended
	April 30, 2022
Risk-free interest rates		1.0	%
Expected dividend yield		—
Volatility factor		30 - 31	%
Expected lives (years)		6.1
Weighted average fair value of options granted	$	3.36

Restricted Stock Units

Restricted stock units (“RSUs”) represent a right to receive 1 share of the Company’s common stock that is both non-transferable and forfeitable unless and until certain ~~circumstances including~~conditions are satisfied. Restricted stock units vest ratably over a three or four-year period, subject to continued employment through each anniversary. The fair value of restricted stock units is determined on the grant date and is amortized over the vesting period on a straight-line basis.

The following table summarizes the RSU activity for the three months ended April 30, 2022:


		Weighted-		Aggregate
		Average Grant		Intrinsic Value
	Shares	Date Fair Value		(in thousands)
Unvested balance, January 31, 2022	5,091,852	$	10.26
Granted	4,001,733		8.51
Vested	(166,667)		10.75
Forfeited	(263,223)		9.39
Unvested balance, April 30, 2022	8,663,695	$	8.36	$	46,351

The total unrecognized stock-based compensation costs related to RSUs was $64.2 million, which is expected to be recognized over a weighted-average period of 2.9 years.

Market-based Restricted Stock Units

Market-based restricted stock units (“MBRSUs”) vest over a four-year performance period, subject to continued employment through each anniversary and achievement of a share price threshold ($12.50 for 20 out of 30 consecutive trading days prior to the fourth anniversary). The fair value of MBRSUs that include vesting based on market conditions are estimated using the Monte Carlo valuation

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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 table summarizes the MBRSU activity for the three months ended April 30, 2022:


		Weighted-		Aggregate
		Average Grant		Intrinsic Value
	Shares	Date Fair Value		(in thousands)
Unvested balance, January 31, 2022	1,095,978	$	8.43
Granted	304,821		7.54
Vested	—		—
Forfeited	(94,736)		7.33
Unvested balance, April 30, 2022	1,306,063	$	7.55	$	6,987

The total unrecognized stock-based compensation costs related to MBRSUs was $6.2 million, which is expected to be recognized over a weighted-average period of 1.5 years.

Performance-based Restricted Stock Units

The Company issued 49,876 performance-based restricted stock units that have a grant-date fair value of $0.5 million during the period from June 12, 2021 to January 31, 2022. Of the 49,876 performance-based restricted stock units, 12,500 shares were vested and 12,500 shares were canceled on January 31, 2022. The remaining 24,876 shares will vest upon the achievement of specified corporate goals. There was no stock-based compensation expense recognized for the remaining 24,876 shares in the ~~event~~three months ended April 30, 2022 as the corporate goals were not achieved before April 30, 2022.

Stock-based Compensation Expense

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



	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
	April 30, 2022		April 30, 2021
Cost of revenues	$	13	$	—
Content and software development		1,575		—
Selling and marketing		1,477		—
General and administrative		5,427		—
Total	$	8,492	$	—

The stock-based compensation for the three months ended April 30, 2022 includes $1.6 million of fair value adjustment for the cash consideration exceeded the fair value of the legacy Codecademy options, which is classified as a ~~stock dividend,~~post-combination expense.

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(11) Revenue

Disaggregated Revenue and Geography Information

The following is a summary of revenues by type for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)) (in thousands):




	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
	April 30, 2022		April 30, 2021
SaaS subscription services	$	103,033	$	78,575
Software maintenance		4,454		4,064
Professional services		10,964		8,191
Software licenses and other		410		871
Instructor led training		45,053		—
Total net revenues	$	163,914	$	91,701

The following table sets forth our revenues by geographic region for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)) (in thousands):




	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
	April 30, 2022		April 30, 2021
Revenue:
United States	$	106,685	$	70,170
Other Americas		9,996		4,461
Europe, Middle East and Africa		41,318		12,113
Asia-Pacific		5,915		4,957
Total net revenues	$	163,914	$	91,701

Other than the United States, no single country accounted for more than 10% of revenue for all periods presented.

Deferred Revenue

Deferred revenue activity for the three months ended April 30, 2022 was as follows (in thousands):


Deferred revenue at January 31, 2022 (Successor)	$	332,853
Billings deferred		111,820
Recognition of prior deferred revenue		(163,914)
Acquisition of Codecademy		18,396
Deferred revenue at April 30, 2022 (Successor)	$	299,155

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

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Deferred Contract Acquisition Costs

Deferred contract acquisition cost activity for the three months ended April 30, 2022 was as follows (in thousands):


Deferred contract acquisition costs at January 31, 2022 (Predecessor (SLH))	$	16,917
Contract acquisition costs		5,096
Recognition of contract acquisition costs		(4,339)
Deferred contract acquisition costs at April 30, 2022 (Successor)	$	17,674

(12) Fair Value Measurements

FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) 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 inputs that reflect the assumptions that market participants would use in pricing the asset or ~~recapitalization, reorganization, merger~~liability developed based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the assumptions market participants would use in pricing the asset or ~~consolidation. However,~~liability developed based on the best information available in the circumstances.

The three levels of the fair value hierarchy established by ASC 820 in order of priority are as follows:

●

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

●

Level 2: Pricing inputs other than quoted prices in active markets included in Level 1, which are either directly or indirectly observable as of the reporting date. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

●

Level 3: Unobservable inputs that reflect the Company’s estimates of assumptions that market participants would use in pricing the asset or liability.

Successor Company Warrants

In connection with the formation of the Company and subsequent acquisitions of Software Luxembourg and Global Knowledge, warrants ~~will not be adjusted for issuance of Class A~~to purchase common stock ~~at a price below its exercise price. Additionally, in no event will~~were issued to investors, sellers of Global Knowledge and an executive of the Company. Warrants that are not subject to ASC 718, Stock Compensation and (i) contained features that could cause the warrant to be puttable to the Company ~~be required to net~~for cash ~~settle~~or (ii) had terms that prevented the ~~warrants. If~~conversion of the ~~Company is unable to complete~~warrant from being fixed in all circumstances, are classified as a ~~Business Combination within~~liability on the ~~Combination Window~~Company’s balance sheet and ~~the Company liquidates the funds held~~measured at fair value, with changes in fair value being recorded in the ~~Trust Account, holders~~income statement, whereas all other warrants meet the equity scope exception and are classified as equity and not remeasured.

A summary of liability classified warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with the respect to such warrants. Accordingly, the warrants may expire worthless.is as follows (in thousands, except per share amounts):

Underlying

Fair Value

Common

Strike

Redemption

Expiration

at April 30,

Type

Shares

Price

Date

2022

Private Placement Warrants – Sponsor

16,300

11.50

None

6/11/26

18,093

The Company classifies certain Private Placement Warrants ~~are identical to~~as liabilities in accordance with ASC Topic 815. The Company estimates the ~~Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise~~fair value of the Private Placement Warrants ~~will not be transferable, assignable or salable until 30 days after the completion~~using a Black-Scholes option pricing model. The fair value of ~~a Business Combination, subject to certain limited exceptions. Additionally,~~ the Private Placement Warrants ~~will~~utilized Level 3 inputs as it is based on significant inputs not observable in the market. The fair value of the Private Placement

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Warrants classified as liabilities were estimated at April 30, 2022 using a Black-Scholes options pricing model and the following assumptions:


	April 30, 2022
Risk-free interest rates		2.88	%
Expected dividend yield		—
Volatility factor		50	%
Expected lives (years)		4.1
Value per unit	$	1.11

Predecessor Company (SLH) Warrants

At each relevant measurement date, the Predecessor warrants were valued using a probability-based approach that considered management’s estimate of the probability of (i) a sale of the company that met certain conditions that caused the warrants to be ~~exercisable~~cancelled for no consideration, (ii) a sale of the company that did not meet certain conditions that caused the warrants to be cancelled for no consideration and (iii) warrants being held to maturity, with the last two scenarios utilizing a Black-Scholes model to estimate fair value. As a result of the Skillsoft Merger, the Predecessor warrants were terminated for no consideration on June 11, 2021.

The following table summarizes the Company’s assets and liabilities that are measured at fair value on a cashless basis and be non-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the samerecurring basis as of April 30, 2022 and are categorized using the ~~Public Warrants.~~fair value hierarchy (in thousands):


	Total		(Level 3)

Private Placement Warrants – Sponsor	$	18,093	18,093
Total liabilities recorded at fair value	$	18,093	18,093

~~Note 8 — Subsequent Events~~The following tables reconcile Level 3 instruments for which significant unobservable inputs were used to determine fair value:


	For the Three
	Months Ended
	April 30, 2022
Balance as of January 31, 2022 (Successor)	$	28,199
Unrealized gains recognized as other income		(10,106)
Balance as of April 30, 2022 (Successor)	$	18,093

	For the Three
	Months Ended
	April 30, 2021
Balance as of January 31, 2021 (Predecessor (SLH))	$	900
Unrealized losses recognized as other income		(100)
Balance as of April 30, 2021 (Predecessor (SLH))	$	800

Other Fair Value Instruments

The Company currently invests excess cash balances primarily in cash deposits held at major banks. The carrying amounts of cash deposits, trade receivables, trade payables and accrued liabilities, as reported on the consolidated balance sheet as of April 30, 2022, approximate their fair value because of the short maturity of those instruments.

The Company considered the fair value of its external borrowings and believes their carrying values approximate fair value at April 30, 2022 based on the recent issuance of additional Term loans timing on April 4, 2022.

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(13) Segment Information

ASC 280, 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, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company’s chief operating decision maker (CODM) is its Chief Executive Officer. The Company’s CODM evaluates results using the operating segment structure as the primary basis for which the allocation of resources and financial results are assessed.

The Company has organized its business into 3 segments: Skillsoft content, SumTotal and Global Knowledge. All of the Company’s businesses market and sell their offerings globally to businesses of many sizes, government agencies, educational institutions and resellers with a worldwide sales force positioned to offer the combinations that best meet customer needs. The CODM primarily uses revenues and operating income as measures used to evaluate financial results and allocation of resources. The Company allocates certain operating expenses to the reportable segments, including general and administrative costs based on the usage and relative contribution provided to the segments. There are no intercompany revenue transactions reported between the Company’s reportable segments.

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

The SumTotal business provides a unified, comprehensive and configurable solution that allows organizations to attract, develop and retain talent. SumTotal’s solution impacts a company’s workforce throughout the entire employee lifecycle and helps companies succeed in an evolving business climate. SumTotal’s primary solutions are Talent Acquisition, Learning Management, Talent Management and Workforce Management.

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

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The following table presents summary results for each of the businesses for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)), (in thousands):




	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
	April 30, 2022		April 30, 2021
Skillsoft Content
Revenues	$	87,276	$	67,057
Operating expenses		126,090		93,127
Operating income (loss)		(38,814)		(26,070)
SumTotal
Revenues		31,585		24,644
Operating expenses		28,548		26,277
Operating income (loss)		3,037		(1,633)
Global Knowledge
Revenues		45,053		—
Operating expenses		51,653		—
Operating income (loss)		(6,600)		—
Consolidated
Revenues		163,914		91,701
Operating expenses		206,291		119,404
Operating income (loss)		(42,377)		(27,703)
Non-operating (expense) income		1,003		(352)
Fair value adjustment of warrants		10,106		—
Interest expense, net		(12,115)		(11,439)
Reorganization items, net		—		—
Benefits from (provision for) income taxes		21,740		2,089
Net (loss) income	$	(21,643)	$	(37,405)

SumTotal segment revenue for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)) includes content-related revenue of $2.9 million and $1.0 million, respectively, attributable to cross selling for customers that use the SumTotal platform to consume Skillsoft content.

Skillsoft content segment depreciation for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)) was $0.9 million and $1.2 million, respectively.

SumTotal segment depreciation for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)) was $1.1 million and $1.2 million, respectively.

The Company’s segment assets primarily consist of cash and cash equivalents, accounts receivable, prepaid expenses, deferred taxes, property and equipment, goodwill and intangible assets. The following table sets forth the Company’s segment assets as of April 30, 2022 and January 31, 2022 (in thousands):



	April 30, 2022		January 31, 2022

Skillsoft	$	1,895,258	$	1,650,190
SumTotal		201,046		226,856
Global Knowledge		331,753		344,902
Corporate		—		—
Consolidated	$	2,428,057	$	2,221,948

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The following table sets forth the Company’s long-lived tangible assets by geographic region as of April 30, 2022 and January 31, 2022 (in thousands):



	April 30, 2022		January 31, 2022

United States	$	14,560	$	14,735
Ireland		279		313
Rest of world		2,794		3,036
Total	$	17,633	$	18,084

(14) Net Loss Per Share

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

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





	Successor		Predecessor (SLH)

		Three Months		Three Months
		Ended April, 30		Ended April, 30
		2022		2021
Net loss	$	(21,643)	$	(37,405)

Weighted average common shares outstanding:
Class A and B – Basic and Diluted (Predecessor (SLH))		*		4,000
Ordinary – Basic and Diluted (Successor)		142,209		*

Net loss per share:
Class A and B – Basic and Diluted (Predecessor (SLH))		*	$	(9.35)
Ordinary – Basic and Diluted (Successor)	$	(0.15)		*

* Not Applicable

Warrants to purchase 705,882 common shares have been excluded from the Predecessor (SLH) period since, for periods of losses, the impact would be anti-dilutive and, for periods of income, no shares would be added to diluted earnings per share under the treasury stock method as the strike price of these awards are above the fair market value of underlying shares for all periods presented.

During the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH)), the Company incurred net losses and, therefore, the effect of the Company’s potentially dilutive securities was not included in the calculation of diluted loss per share as the effect would be anti-dilutive. The following table contains share/unit totals with a potentially dilutive impact (in thousands):


	Successor	Predecessor (SLH)

Warrants to purchase common shares	61,967	706
Stock Options	2,826	—
RSUs	9,995	—
Total	74,788	706

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(15) Related Party Transactions

Predecessor (SLH) Related Party Transactions

Upon emergence from Chapter 11 on August 27, 2020, the Company’s exit credit facility consisting of $110 million of First Out Term Loans and $410 million of Second Out Term Loans was financed in whole by the Company’s Class A shareholders. Class A shareholders had the ability to trade their debt positions independently from their equity positions, however, the substantial majority of First Out and Second Out term loans were held by Class A shareholders. In connection with the Company’s refinancing on July 16, 2021, the First and Second Out terms loans were repaid in full.

Successor Related Party Transactions

Strategic Support Agreement

In connection with the closing of the Skillsoft Merger on June 11, 2021, the Company entered into a strategic support agreement with its largest shareholder, pursuant to which the shareholder agreed to provide certain business development and investor relations support to the Company for one year after closing of the transaction.

Agreements with Affiliated Entities

Our largest shareholder has a broad portfolio of investments, within and outside of Ed-tech, where it controls or exerts influence over such investments through ownership and in some cases board seats.

On December 10, 2022, Skillsoft entered into a distribution and resale agreement with a company that is majority-owned by our largest shareholder and its affiliates. On February 18, 2022, SumTotal entered into a reseller agreement with a portfolio company of our largest shareholder that also has a common board member. Due to the timing of these two new agreements, no consideration was due to either party for the fiscal year ended January 31, 2022 and the three months ended April 30, 2022.

The Company also entered into an agreement for a technical partnership with a portfolio company of our largest shareholder that also has a common board member that includes a collaboration for an interface between Percipio and its products. Neither party is due any consideration under this agreement.

Agreements with Largest Shareholder

In December 2021, Skillsoft entered into a commercial agreement to provide off-the-shelf Skillsoft products to the Company’s largest shareholder and its affiliates for $0.7 million over three years.

Codecademy Transaction

Our largest shareholder also owned an interest in Codecademy which we acquired on April 4, 2022, as discussed in Note 3 and elsewhere.

Consulting Services

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

(16) Subsequent Events

The Company has completed an evaluation of all subsequent events ~~and transactions that occurred~~ after the balance sheet date ~~up to~~of April 30, 2022 through the date this Quarterly Report on Form 10-Q was filed with the SEC, to ensure that the financial statement was issued. Other than as described in these financial statements in relation to the Company’s Initial Public Offering and related transactions, the Company did not identify any subsequentthis filing includes appropriate disclosure of events ~~that would have required adjustment or disclosure~~both recognized in the financial statements as of April 30, 2022, and events which occurred subsequently but were not recognized in the financial statements. The Company has concluded that no subsequent events have occurred that require disclosure, except as disclosed within these financial statements.

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~~Item~~ITEM 2. ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

References in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Churchill Capital Corp II. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Churchill Sponsor II LLC. The following discussion ~~and analysis~~ of the ~~Company’s~~ financial condition and results of operations of Skillsoft (as defined below) is a supplement to and should be read in conjunction with ~~the~~Skillsoft’s condensed consolidated financial statements and ~~the~~related notes ~~thereto contained~~appearing elsewhere in this Quarterly ~~Report. Certain information contained in~~Report and with Skillsoft’s Annual Report on Form 10-K filed with the Securities and Exchange Commission (the “SEC”) on April 18, 2022. This discussion ~~and analysis set forth below includes~~may contain forward-looking statements based upon current expectations that involve risks and uncertainties.

~~Special Note Regarding Forward-Looking Statements~~

This Quarterly Report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act that are not historical facts, and involve risks and uncertainties that could cause Skillsoft’s actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategy and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results tomay differ materially from those anticipated in ~~the~~these forward-looking statements please refer to the Risk Factors section of the Registration Statement on Form S-1 (Registration No. 333-232057) filed with the SEC. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of ~~new information, future events or otherwise.~~various factors, including those set forth under “Risk Factors” in Part II, Item 1A of this report. Unless otherwise noted, amounts referenced in this discussion, other than in reference to share numbers, are in thousands.

Completion of the Business Combinations

~~Overview~~

~~We are~~On June 11, 2021, Churchill Capital Corp II and Software Luxembourg Holding S.A., a ~~blank check~~global leader in digital learning and talent management solutions, completed a business combination and subsequent acquisition of Albert DE Holdings Inc. (“Global Knowledge” and such acquisition, the “Global Knowledge Merger”), a worldwide leader in IT and professional skills development. The combined company ~~formed~~operates as Skillsoft Corp. (“Skillsoft”, “we”, “us”, “our” and the “Company”) and is listed on the New York Stock Exchange under the ~~laws~~ticker symbol “SKIL” beginning on June 14, 2021.

On December 22, 2021, the Company announced a definitive agreement to acquire Codecademy, a leading online learning platform for technical skills. Codecademy is an innovative and popular 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 Codecademy acquisition closed on April 4, 2022 for total consideration of approximately $386.0 million, consisting of the ~~State~~issuance of ~~Delaware on April 11, 2019~~30,374,427 common shares and a net cash payment of $198.6 million.

Company’s Business following the Business Combinations

Skillsoft is a global leader in corporate digital learning, serving more than 75% of the Fortune 1000, customers in over 160 countries, and a community of learners of more than 90 million globally. Skillsoft’s primary learning solutions include: (i) Percipio, an intelligent and immersive digital learning platform; (ii) Global Knowledge, a global provider of authorized information technology & development training and professional skills; (iii) Codecademy, an online learning platform for technical skills that uses an innovative, scalable approach to online coding education; (iv) Pluma, a digital platform that provides individualized executive-quality coaching that is personal yet scalable; and (v) SumTotal, a SaaS-based Human Capital Management (“HCM”) solution with a leading Talent Development platform.

The Company provides enterprise learning solutions designed to prepare organizations for the future of work, enable them to overcome critical skill gaps, drive demonstrable behavior-change, and unlock the potential in one of their most important assets: their people. The Company’s award-winning, AI-driven, immersive learning platform, Percipio, is purpose ~~of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination with one or~~built to make learning easier, more ~~businesses. We intend~~accessible, and more effective. Percipio is an open, modern and extensible platform designed to ~~effectuate our Business Combination using cash from~~meet the ~~proceeds~~needs of the ~~Initial Public Offering~~enterprise customer. Skillsoft offers a comprehensive suite of premium, original, and authorized partner content, including one of the broadest and deepest libraries of leadership & business, technology & developer, and compliance curricula. With access to a broad spectrum of learning options (including video, audio, books, bootcamps, live events, practice labs and individualized coaching), organizations can meaningfully increase learner engagement and retention. In addition, we believe our recent acquisition of Codecademy will further strengthen our content library, enhance the Percipio platform, broaden our customer reach and create significant cross selling opportunities, positioning us for faster growth.

The corporate digital learning industry is rapidly growing, driven by significant tailwinds as organizations focus on upskilling, reskilling, and future-proofing their workforces and the ~~sale~~accelerated shift from in-person training to digital training due, in part, to the significant and likely permanent shift to largely remote and distributed workforces triggered by the COVID-19 pandemic and increased emphasis on talent driven by the “great resignation.” The war for talent, labor shortages, wage inflation, hybrid work, early retirements, and burnout among those who stay behind all contribute to this growing demand. According to a January 2021 report by McKinsey, 87% of companies worldwide either currently have skills gaps or believe they will within the next few years, and core skills are changing at an unprecedented pace. In a recent survey conducted by Deloitte, the vast majority of CEO’s cited labor and skills shortages as the

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number one threat to their business in the coming year – ahead of the ~~Private Placement Warrants,~~pandemic, supply chain disruption, inflation and market instability, cybersecurity, and political instability. According to the Organization for Economic Co-operation and Development, technology will radically transform 1.1 billion jobs by 2030. CEOs, Chief People Officers, and the companies they and their teams lead need to transform their current workforce into one adapted for tomorrow’s demands. We believe these factors present a significant market opportunity for our ~~capital stock, debt or a combination of cash, stock and debt.~~

~~The issuance of additional shares of our stock in a Business Combination:~~

	•	may significantly dilute the equity interest of investors, which dilution would increase if the anti-dilution provisions in the Class B common stock resulted in the issuance of Class A shares on a greater than one-to-one basis upon conversion of the Class B common stock;
	•	~~may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;~~
	•	could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;
	•	~~may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and~~
	•	~~may adversely affect prevailing market prices for our Class A common stock and/or warrants.~~

~~Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:~~

	•	~~default and foreclosure on our assets if our operating revenues after a Business Combination are insufficient to repay our debt obligations;~~
	•	acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;
	•	~~our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand;~~
	•	~~our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding;~~
	•	~~our inability to pay dividends on our common stock;~~
	•	using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, expenses, capital expenditures, acquisitions and other general corporate purposes;
	•	~~limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;~~
	•	~~increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; and~~
	•	limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, execution of our strategy and other purposes and other disadvantages compared to our competitors who have less debt.

solutions.

Results of Operations

Our financial results for the three months ended April 30, 2022 are referred to as those of the “Successor” period. Our financial results for the three months ended April 30, 2021 are referred to as those of the “Predecessor (SLH)” period. Our results of operations as reported in our Condensed Consolidated Financial Statements for these periods are prepared in accordance with GAAP. Although we are required by GAAP to report on our results for the three months ended April 30, 2022 and 2021 separately, we do not believe that reviewing the results of the periods in isolation would be useful in identifying trends in or reaching conclusions regarding our overall operating performance.

The table below presents the results for the three months ended April 30, 2022 and 2021.




	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
(In thousands)	April 30, 2022		April 30, 2021
Revenues:
Total revenues	$	163,914	$	91,701
Operating expenses:
Costs of revenues		47,634		24,521
Content and software development		22,773		16,607
Selling and marketing		44,883		28,502
General and administrative		29,720		12,362
Amortization of goodwill and intangible assets		43,854		34,943
Recapitalization and acquisition-related costs		13,442		1,932
Restructuring		3,985		537
Total operating expenses		206,291		119,404
Operating loss		(42,377)		(27,703)
Interest and other expense, net		(11,112)		(11,791)
Fair value adjustment to warrants		10,106		—
Loss before benefit from income taxes		(43,383)		(39,494)
Benefit from income taxes		(21,740)		(2,089)
Net loss	$	(21,643)	$	(37,405)

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The following table sets forth certain items from our condensed consolidated statements of operations as a percentage of total revenues for the periods indicated:



	Successor	Predecessor (SLH)
	Three Months	Three Months
	Ended April 30,	Ended April 30,
	2022	2021
Revenues:
Total revenues	100.0%	100.0%
Operating expenses:
Costs of revenues	29.1%	26.7%
Content and software development	13.9%	18.1%
Selling and marketing	27.4%	31.1%
General and administrative	18.1%	13.5%
Amortization of intangible assets	26.8%	38.1%
Recapitalization and acquisition-related costs	8.2%	2.1%
Restructuring	2.4%	0.6%
Total operating expenses	125.9%	130.2%
Operating loss	(25.9)%	(30.2)%
Interest and other expense, net	(6.8)%	(12.9)%
Fair value adjustment to warrants	6.2%	0.0%
Loss before benefit from income taxes	(26.5)%	(43.1)%
Benefit from income taxes	(13.3)%	(2.3)%
Net loss	(13.2)%	(40.8)%

Revenues

We ~~have neither engaged in any operations nor generated any revenues to date. Our only activities from April 11, 2019 (inception)~~provide, through ~~June 30, 2019 were organizational activities, those necessary~~our Skillsoft, Global Knowledge, and SumTotal brands, enterprise learning solutions designed to prepare organizations for the ~~Initial Public Offering, described below,~~future of work, overcome critical skill gaps, drive demonstrable behavior-change, and ~~after~~unlock the potential in their people.

Skillsoft generates revenues from its comprehensive suite of premium, original, and authorized partner content, featuring one of the deepest libraries of leadership & business, technology & development, and compliance curricula. With access to a broad spectrum of learning options (including video, audio, books, bootcamps, live events, and practice labs), organizations can meaningfully increase learner engagement and retention. Skillsoft’s offerings are delivered through Percipio, our ~~Initial Public Offering, identifying~~award-winning, AI-driven, immersive learning platform purpose built to make learning easier, more accessible, and more effective. These learning solutions are typically sold on a ~~target company~~subscription basis for a ~~Business Combination. We do not expect~~fixed term.

Global Knowledge generates revenues from virtual, in-classroom, and on-demand training solutions in information technology geared at foundational, practitioner and expert information technology professionals. Global Knowledge’s digital and in-classroom learning solutions provide enterprises, government agencies, educational institutions, and individual customers a broad selection of customizable courses to ~~generate any operating~~meet their technology and development needs.

SumTotal generates revenues ~~until after~~from its unified, comprehensive and configurable SaaS talent management solution that allows organizations to attract, develop and retain the ~~completion~~best talent. SumTotal also sells professional services related to the talent management solution, and occasionally provide perpetual and term-based licenses for on-premise versions of the solution.

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The following table sets forth the percentage of our revenues attributable to geographic regions for the periods indicated:



	Successor	Predecessor (SLH)
	Three Months	Three Months
	Ended	Ended
	April 30, 2022	April 30, 2021
Revenues:
United States	65.1%	76.5%
Other Americas	6.1%	4.9%
Europe, Middle East and Africa	25.2%	13.2%
Asia-Pacific	3.6%	5.4%
Total revenues	100.0%	100.0%

Subscription and Non-Subscription Revenue

SaaS Subscription Revenue.Represents revenue generated from contracts specifying a minimum fixed fee for services delivered over the life of the contract. The initial term of enterprise contracts is generally one to five years and is generally non-cancellable for the term of the subscription. The fixed fee is generally paid upfront. These contracts typically consist of subscriptions to our various offerings which provide continuous access to our SaaS platforms and associated content over the contract term. Subscription revenues are inclusive of maintenance revenue for SumTotal. Subscription revenue is usually recognized ratably over the contract term.

Non-Subscription Revenue.Primarily represents the sale of Global Knowledge instructor led training offerings, which consist of both in-person and virtual environments. Intructor led training, including virtual offerings, are first scheduled, then delivered later, with revenue realized on the delivery date. Non-subscription revenue also includes professional services related to implementation of our offerings and subsequent, ongoing consulting engagements. Our non-subscription services complement our subscription business in creating strong and comprehensive customer relationships.

The following table sets forth (i) SaaS subscription and (ii) non-subscription revenue for our business units for the periods indicated:



	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
(In thousands)	April 30, 2022		April 30, 2021
SaaS subscription revenues:
Content	$	82,523	$	63,644
SumTotal		24,964		18,995
Total subscription revenues		107,487		82,639
Non-subscription revenues:
Content		4,754		3,413
Global Knowledge		45,053		—
SumTotal		6,620		5,649
Total non-subscription revenues		56,427		9,062
Total revenues	$	163,914	$	91,701

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Revenue by Product and Service Type

The following is a summary of our revenues by product and service type for the periods indicated:




	Successor		Predecessor (SLH)
	Three Months		Three Months		Dollar
	Ended		Ended		Increase/		Percent
(In thousands, except percentages)	April 30, 2022		April 30, 2021		(Decrease)		Change
Revenues:
SaaS subscription services	$	103,033	$	78,575	$	24,458	31.1%
Software maintenance		4,454		4,064		390	9.6%
Professional services		10,964		8,191		2,773	33.9%
Software licenses and other		410		871		(461)	(52.9)%
Instructor led training		45,053		—		45,053	100.0%
Total revenues	$	163,914	$	91,701	$	72,213	78.7%

Revenues increased $72.2 million, or 78.7%, for the three months ended April 30, 2022, compared to the same period in 2021. The primary reason for the increase in GAAP revenue is due to the inclusion of Global Knowledge revenue for the period subsequent to its acquisition on June 11, 2021, which resulted in an increase of $45.1 million for the three months ended April 30, 2022. Revenues for the three months ended April 30, 2021 were also lower due to the application of fresh-start reporting in August 2020, which required deferred revenue as of August 28, 2020 to be reduced to its estimated fair value, which is derived from the estimated costs to fulfill contractual obligations at the time of a change in control rather than the value of contractual billings to customers. The application of fresh-start reporting resulted in a decrease in GAAP revenue of approximately $19.9 million in the three months ended April 30, 2021. We adopted ASU 2021-08 – Business ~~Combination. We expect~~Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers (“ASU 2021-08”), effective at the beginning of the Successor period on June 11, 2021. ASU 2021-08 requires an acquirer in a business combination to ~~generate non-operating income~~recognize and measure deferred revenue from acquired contracts using the revenue recognition guidance in Topic 606, rather than the ~~form of interest income on marketable securities held after the Initial Public Offering. We incur expenses as~~prior requirement to record deferred revenue at a lower fair value. As a result of the adoption of ASU 2021-08, we did not experience a decline in revenue subsequent to June 11, 2021 attributable to a fair value adjustment as we did with the application of fresh-start reporting in the prior year. After normalizing for the impact of the acquisition of Global Knowledge and fresh-start reporting, revenues were slightly higher due to (i) the inclusion of Pluma revenue and one month of Codecademy revenue due to their acquisitions on June 30, 2021 and April 3, 2022, respectively, and (ii) organic growth due to higher bookings in the prior year, as revenue from our subscription offerings is typically recognized over the twelve months that follow a booking.

Operating expenses




	Successor		Predecessor (SLH)
	Three Months		Three Months		Dollar
	Ended		Ended		Increase/		Percent
(In thousands, except percentages)	April 30, 2022		April 30, 2021		(Decrease)		Change
Cost of revenues	$	47,634	$	24,521	$	23,113	94.3%
Content and software development		22,773		16,607		6,166	37.1%
Selling and marketing		44,883		28,502		16,381	57.5%
General and administrative		29,720		12,362		17,358	140.4%
Amortization of intangible assets		43,854		34,943		8,911	25.5%
Recapitalization and acquisition-related costs		13,442		1,932		11,510	595.8%
Restructuring		3,985		537		3,448	642.1%
Total operating expenses	$	206,291	$	119,404	$	86,887	72.8%

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Cost of revenues

Cost of revenues consists primarily of employee salaries and benefits for hosting operations, professional service and customer support personnel; royalties; hosting and software maintenance services; facilities and utilities costs; consulting services; instructor fees, course materials, logistics costs and overhead costs associated with virtual, in-classroom, and on-demand training solutions. The table below provides details regarding the changes in components of cost of revenues.




	Successor		Predecessor (SLH)
	Three Months		Three Months		Dollar
	Ended		Ended		Increase/		Percent
(In thousands, except percentages)	April 30, 2022		April 30, 2021		(Decrease)		Change
Compensation and benefits	$	20,042	$	13,188	$	6,854	52.0%
Royalties		7,230		4,850		2,380	49.1%
Hosting and software maintenance		3,536		3,029		507	16.7%
Courseware, reseller fees and outside services		12,682		1,024		11,658	1138.5%
Facilities and utilities		3,873		2,347		1,526	65.0%
Other		271		83		188	226.5%
Total cost of revenues	$	47,634	$	24,521	$	23,113	94.3%

The increases in all components of cost of revenues for the three months ended April 30, 2022, compared to the same period in 2021, were primarily the result of the inclusion of Global Knowledge’s expenses incurred subsequent to its acquisition on June 11, 2021. The increase in hosting and software maintenance expenses was offset by the decrease in server licensing costs, which was the result of the migration of Percipio from our servers to cloud storage.

Content and software development

Content and software development expenses include costs associated with the development of new products and the enhancement of existing products, consisting primarily of employee salaries and benefits; development-related professional services; facilities costs; depreciation; and software maintenance costs. The table below provides details regarding the changes in components of content and software development expenses.




	Successor		Predecessor (SLH)
	Three Months		Three Months		Dollar
	Ended		Ended		Increase/		Percent
(In thousands, except percentages)	April 30, 2022		April 30, 2021		(Decrease)		Change
Compensation and benefits	$	16,384	$	10,808	$	5,576	51.6%
Consulting and outside services		4,325		3,673		652	17.8%
Facilities and utilities		1,185		1,308		(123)	(9.4)%
Software Maintenance		862		722		140	19.4%
Other		17		96		(79)	(82.3)%
Total content and software development expenses	$	22,773	$	16,607	$	6,166	37.1%

The increase in compensation and benefits for the three months ended April 30, 2022, compared to the same period in 2021, was primarily due to increased headcount within our content development team in 2022, and the inclusion of Codecademy compensation expenses incurred subsequent to its acquisition on April 4, 2022. The increase in consulting and outside services expenses for the three months ended April 30, 2022, compared to the same period in 2021, was due to the inclusion of Global Knowledge’s expenses incurred in the three months ended April 30, 2022 and increased third party software development costs.

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Selling and marketing

Selling and marketing, or S&M, expenses consist primarily of employee salaries and benefits for selling, marketing and pre-sales support personnel; commissions; travel expenses; advertising and promotional expenses; consulting and outside services; facilities costs; depreciation; and software maintenance costs. The table below provides details regarding the changes in components of S&M expenses.




	Successor		Predecessor (SLH)
	Three Months		Three Months		Dollar
	Ended		Ended		Increase/		Percent
(In thousands, except percentages)	April 30, 2022		April 30, 2021		(Decrease)		Change
Compensation and benefits	$	31,881	$	21,211	$	10,670	50.3%
Advertising and promotions		8,142		3,485		4,657	133.6%
Facilities and utilities		1,566		1,704		(138)	(8.1)%
Consulting and outside services		2,041		1,139		902	79.2%
Software Maintenance		1,146		893		253	28.3%
Other		107		70		37	52.9%
Total S&M expenses	$	44,883	$	28,502	$	16,381	57.5%

The increases in compensation and benefits, advertising and promotions, and consulting and outside services expenses for the three months ended April 30, 2022, compared to the same period in 2021, were primarily the result of the inclusion of Global Knowledge’s S&M expenses incurred subsequent to its acquisition on June 11, 2021. Also contributing to the increase in advertising and promotions expenses was higher events related spend in the three months ended April 30, 2022, compared to the same period in 2021.

General and administrative

General and administrative, or G&A, expenses consist primarily of employee salaries and benefits for executive, finance, administrative, and legal personnel; audit, legal and consulting fees; insurance; franchise, sales and property taxes; facilities costs; and depreciation. The table below provides details regarding the changes in components of G&A expenses.




	Successor		Predecessor (SLH)
	Three Months		Three Months		Dollar
	Ended		Ended		Increase/		Percent
(In thousands, except percentages)	April 30, 2022		April 30, 2021		(Decrease)		Change
Compensation and benefits	$	17,455	$	7,690	$	9,765	127.0%
Consulting and outside services		6,716		2,861		3,855	134.7%
Facilities and utilities		1,988		748		1,240	165.8%
Franchise, sales, and property tax		730		520		210	40.4%
Insurance		1,935		371		1,564	421.6%
Software Maintenance		423		100		323	323.0%
Other		473		72		401	556.9%
Total G&A expenses	$	29,720	$	12,362	$	17,358	140.4%

The increases in compensation and benefits, facilities and utilities, and software maintenance expenses for the three months ended April 30, 2022, compared to the same period in 2021, were primarily the result of the inclusion of Global Knowledge’s G&A expenses incurred subsequent to its acquisition on June 11, 2021. Also contributing to the increase in compensation and benefits expenses was the stock-based compensation related to the stock options and restricted stock units granted to key employees. The increase in consulting and outside services expenses for the three months ended April 30, 2022, compared to the same period in 2021, was primarily due to increased legal, audit and tax services attributable to being ~~a public company (for legal, financial reporting, accounting and auditing compliance),~~publicly listed as well as integration-related costs related to the combination of Skillsoft and Global Knowledge. The increase in insurance expenses for the three months ended April 30, 2022, compared to the same period in 2021, was due ~~diligence expenses.~~to the higher directors and officers insurance policies attributable to the Company following the June 2021 business combinations.

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~~For~~

Amortization of intangible assets

Intangible assets arising from business combinations are developed technology, customer-related intangibles, trade names and other identifiable intangible assets with finite lives. These intangible assets are amortized over the estimated useful lives of such assets. We also capitalize certain internal use software development costs related to our SaaS platform incurred during the application development stage. The internal use software is amortized on a straight-line basis over its estimated useful life.

The increase in amortization of intangible assets for the three months ended April 30, 2022, compared to the same period in 2021, was primarily due to the intangible assets that arose from the business combinations completed in June 2021.

Recapitalization and acquisition-related costs

Recapitalization and acquisition-related costs consist of professional fees for legal, investment banking and other advisor costs incurred in connection with our business combination completed in June 2021, and subsequent acquisition related activities driven by the Codecademy acquisition and related debt issuance.

Restructuring

In connection with the acquisition integration process, we continued our initiatives and commitment to reduce our costs and better align operating expenses with existing economic conditions and our operating model. During the three months ended April 30, 2022, we recorded restructuring charges of $4.0 million for employee severance costs.

In January 2021, we committed to a restructuring plan that encompassed a series of measures intended to improve our operating efficiency, competitiveness and business profitability. These included workforce reductions mainly within our SumTotal business, and consolidation of facilities as we are adopting new work arrangements for certain locations. During the three months ended April 30, 2021, we recorded restructuring charges of $0.5 million for employee severance cost adjustments.

Interest and other expense

Interest and other expense, net, consists of gain and loss on derivative instruments, interest income, interest expense, and other expense and income.




	Successor		Predecessor (SLH)
	Three Months		Three Months		Dollar
	Ended		Ended		(Increase)/		Percent
(In thousands, except percentages)	April 30, 2022		April 30, 2021		Decrease		Change
Other income (expense), net	$	1,003	$	(352)	$	1,355	(384.9)%
Interest income		166		10		156	1560.0%
Interest expense, net		(12,281)		(11,449)		(832)	7.3%
Interest and other expense, net	$	(11,112)	$	(11,791)	$	(679)	5.8%

The net other income (expense) was primarily the foreign exchange gains and losses (specifically, resulting from foreign currency denominated transactions and the revaluation of foreign currency denominated assets and liabilities) recognized during the three months ended April 30, 2022 and 2021, which fluctuate as the U.S. dollar appreciates or depreciates against other currencies. The increase in interest expense for the three months ended April 30, 2022, compared to the same period in 2021, was due to $3.9 million of financing costs recognized as interest expense in the three months ended April 30, 2022. The $3.9 million of financing costs were incurred in connection with the $160 million of Term B-1 Loans under the Amended Credit Agreement. The increase was offset by savings from lower interest rates under the Successor’s credit agreement.

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Fair value adjustments to warrants

The gains attributable to warrants for the three months ended April 30, 2022 are due to a decline in the value of our common stock during the period, which decreased the fair value of our liability classified warrants that are marked to market at each balance sheet date, with gains and losses being recorded in current period earnings.

Benefit from income taxes

Successor

Predecessor (SLH)

Three Months

Dollar

Ended

Increase/

Percent

(In thousands, except percentages)

April 30, 2022

April 30, 2021

(Decrease)

Change

Benefit from income taxes

(21,740)

(2,089)

19,651

(940.7)%

Effective income tax rate

50.1%

5.3%

The effective income tax rate for the three months ended April ~~11, 2019 (inception) through June~~ 30, ~~2019, we had~~2022, differed from the United States federal statutory rate of 21.0% due primarily to the impact of non-deductible items, foreign rate differential, and changes in the valuation allowance on the Company’s deferred tax assets. Due to the acquisition of Codecademy on April 4, 2022 the Company analzyed the realizability of it’s existing deferred tax assets with the addition of the Codecademy assets and liabilities. Based on this analysis the Company determined that a ~~net loss~~valualtion allowance release of ~~$1,000, which consisted~~$21.6 million was required and recorded in full as a discrete income tax benefit for the three months ended April 30, 2022.

The effective income tax rate for the three months ended April 30, 2021, differed from the Luxembourg statutory rate of ~~formation costs.~~24.9% due primarily to the impact of foreign earnings in lower tax jurisdictions and an increase in the valuation allowance on the Company’s deferred tax assets, partially offset by a decrease in reserves for uncertain tax positions.

Liquidity and Capital Resources

Liquidity and Sources of Cash

As of ~~June~~April 30, ~~2019,~~2022, we had $75.6 million of cash and cash equivalents on hand. We have funded operations primarily through the use of ~~$7,872. Until~~cash collected from our customers and the ~~consummation~~proceeds received from the Term Loan Facility (described below), supplemented from time to time with borrowings under our accounts receivable facility (described below). Our cash requirements vary depending on factors such as the growth of the ~~Initial Public Offering,~~business, changes in working capital and capital expenditures. We expect to operate the ~~Company’s only source~~business and execute our strategic initiatives principally with funds generated from operations and supplemented from borrowings up to a maximum of $75.0 million under our accounts receivable facility. We anticipate that we will have sufficient internal and external sources of liquidity ~~was an initial purchase~~to fund operations and anticipated working capital and other expected cash needs for at least the next 12 months as well as for the foreseeable future with capital sources currently available.

Term Loan

On July 16, 2021, Skillsoft Finance II, Inc. (“Skillsoft Finance II”), a subsidiary of ~~common stock~~Skillsoft Corp., entered into a Credit Agreement (the “Credit Agreement”), by and among Skillsoft Finance II, as borrower, Skillsoft Finance I, Inc. (“Holdings”), the ~~Sponsor~~lenders party thereto and ~~loans from our Sponsor.~~

~~Subsequent~~Citibank, N.A., as administrative agent and collateral agent, pursuant to which the ~~quarterly period covered by this Quarterly Report,~~lenders provided a $480 million term loan facility (the “Term Loan Facility”) to Skillsoft Finance II, the proceeds of which, together with cash on hand, were used to refinance existing debt. The Term Loan Facility is scheduled to mature on July 1, 2019, we consummated the Initial Public Offering of 69,000,000 Units at a price of $10.00 per Unit, which includes the full exercise by the underwriters of the over-allotment option, at $10.00 per Unit, generating gross proceeds of $690,000,000. Simultaneously16, 2028.

In connection with the closing of the ~~Initial Public Offering, we consummated the sale of 15,800,000 Private Placement Warrants~~Codecademy acquisition, Skillsoft Finance II entered into Amendment No. 1 to the ~~Sponsor~~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 parties thereto as Term B-1 Lenders, which amended the Credit Agreement (as amended by the First Amendment, the “Amended Credit Agreement”).

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Prior to the maturity thereof, the Initial Term Loans will be subject to quarterly amortization payments of 0.25% of the principal amount. The Amended Credit Agreement requires that any prepayment of the Initial Term Loans in connection with a ~~price~~repricing transaction shall be subject to (i) a 2.00% premium on the amount of ~~$1.00 per warrant, generating gross~~Initial Term Loans prepaid if such prepayment occurs prior to July 16, 2022 and (ii) a 1.00% premium on the amount of Initial Term Loans prepaid in connection with a Repricing Transaction (as defined in the Amended Credit Agreement), if such prepayment occurs on or after July 16, 2022 but on or prior to January 16, 2023. The proceeds of ~~$15,800,000.~~the Term B-1 Loans were used by the Company to finance, in part, the Codecademy acquisition, and to pay costs, fees, and expenses related thereto.

~~Following~~Accounts Receivable Facility

We also have access to up to $75.0 million of borrowings under our accounts receivables facility, where borrowing can be made against eligible accounts receivable, with advance rates between 50.0% and 85.0%. Borrowings under the ~~Initial Public Offering,~~facility bear interest at 3.00% per annum plus the ~~exercise~~greater of (i) the prime rate or (ii) the sum of 0.5% per annum plus the federal funds rate. The maturity date of the ~~over-allotment option~~accounts receivable facility is the earlier of (i) December 2024 or (ii) 90 days prior to the maturity of any corporate debt. The accounts receivable facility requires a minimum outstanding balance of $10 million at all times. Based on seasonality of billings and the ~~sale~~characteristics of accounts receivable, some of which are not eligible for advances, we are not always able to access the ~~Private Placement Warrants, a total~~full $75 million of ~~$690,000,000 was placed~~capacity.

Cash Flows

The following table summarizes our cash flows for the period presented:



	Successor		Predecessor (SLH)
	Three Months		Three Months
	Ended		Ended
(In thousands)	April 30, 2022		April 30, 2021
Net cash provided by operating activities	$	7,882	$	39,676
Net cash used in investing activities		(202,532)		(1,880)
Net cash provided by (used in) financing activities		108,539		(4,439)
Effect of foreign currency exchange rates on cash and cash equivalents		(2,157)		(140)
Net (decrease) increase in cash and cash equivalents	$	(88,268)	$	33,217

Cash Flows from Operating Activities

The decrease in cash provided by operating activities for the three months ended April 30, 2022 compared to the corresponding period in the ~~Trust Account~~prior year was primarily due to (i) higher recapitalization and ~~we had $2,633,175 of cash held outside of~~acquisition-related costs, driven by the ~~Trust Account, after payment of~~Codecademy acquisition and related debt issuance, (ii) higher one-time restructuring and integration-related costs related to the ~~Initial Public Offering,~~combination of Skillsoft and ~~available for working capital purposes. We incurred $34,319,807 in transaction costs, including $12,212,000~~Global Knowledge, (iii) higher annual incentive compensation payments, and (iv) the timing of ~~underwriting fees, $21,371,000~~corporate events and vendors payments compared to the prior year.

Cash Flows from Investing Activities

Cash flows from investing activities include cash paid of ~~deferred underwriting fees and $736,807~~$201.7 million related to the acquisition of ~~other costs.~~

~~We intend to use substantially all~~Codecademy. See Note 3 “Business Combinations” of the ~~funds held~~Notes to Unaudited Condensed Consolidated Financial Statements for more details. Our purchases of property and equipment largely consist of computer hardware and software, as well as capitalized software development costs, to support content and software development activities.

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Cash Flows from Financing Activities

Cash flows from financing activities consist of borrowings and repayments under our Predecessor and Successor debt facilities and our accounts receivable facility. We received $153.2 million of net proceeds from the Amended Credit Agreement and used most of the proceeds for the acquisition of Codecademy on April 4, 2022.

Contractual and Commercial Obligations

The scheduled maturities of our debt and future minimum rental commitments under non-cancelable lease agreements as of April 30, 2022 were as set forth in the ~~Trust Account, including any amounts representing interest earned on~~table below.


	Payments due by Fiscal Year
(In thousands)	Total		2023 ⁽¹⁾		2024-2025		2026-2027		Thereafter
Term Loan Facility	$	637,199	$	4,803	$	12,808	$	12,808	$	606,780
Operating leases		20,126		5,098		7,811		2,518		4,699
Total	$	657,325	$	9,901	$	20,619	$	15,326	$	611,479

(1)Excluding payments made during the ~~Trust Account (less deferred underwriting commissions and income taxes payable),~~three months ended April 30, 2022.

From time to ~~complete our Business Combination. To the extent that our capital stock~~time, we are a party to or ~~debt is used, in whole or in part, as consideration to complete our Business Combination, the remaining proceeds held~~may be threatened with litigation in the ~~Trust Account will be used as working capital to finance the operations~~ordinary course of ~~the target business or businesses, make other acquisitions and pursue our growth strategies.~~

We intend to use the funds held outside the Trust Account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, and structure, negotiate and complete a Business Combination.

In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the initial stockholders or their affiliates may, but are not obligated to, loan us funds as may be required. If we complete a Business Combination, we would repay such loaned amounts. In the event that a Business Combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into warrants identical to the Private Placement Warrants, at a price of $1.00 per warrant at the option of the lender.

~~We do not believe we will need to raise additional funds in order to meet the expenditures required for operating~~ our business. ~~However, if~~We regularly analyze then current information, including, as applicable, our ~~estimate~~defense and insurance coverage and, as necessary, provide accruals for probable and estimable liabilities for the eventual disposition of ~~the costs of identifying~~these matters. We are presently not a ~~target business, undertaking in-depth due diligence and negotiating a Business Combination are less than the actual amount necessary~~party to do so, we may have insufficient funds available to operate our business prior to our Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combination or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination. If we are unable to complete our Business Combination because we do not have sufficient funds available to us, we will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.

~~Off-Balance Sheet Arrangements~~

~~We did not have~~ any ~~off-balance sheet arrangements as of June 30, 2019.~~material legal proceedings.

~~Contractual obligations~~

We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay an affiliate of the Sponsor a monthly fee of $20,000 for office space, administrative and support services to the Company. We began incurring these fees on June 26, 2019 and will continue to incur these fees monthly until the earlier of the completion of the Business Combination and the Company’s liquidation.

Critical Accounting Policies and Estimates

~~The preparation of~~Our condensed consolidated financial statements and the related ~~disclosures~~notes have been prepared in ~~conformity~~accordance with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of these consolidated financial statements requires ~~management~~us to make estimates and assumptions that affect the reported amounts of assets and liabilities ~~disclosure~~and the disclosures of contingent assets and liabilities atas of the date of the consolidated financial statements, and ~~income~~the reported amounts of assets, liabilities, revenues and expenses during the ~~periods reported. Actual~~reporting period. We regularly reevaluate our estimates and judgments, including those related to the following: business combinations, revenue recognition, impairment of goodwill and intangible assets, stock-based compensation, accounting for warrants, income tax assets and liabilities; and restructuring charges and accruals. We base our estimates and judgments on historical experience and various other factors we believe to be reasonable under the circumstances, the results of which form the basis for judgments about the carrying values of assets and liabilities and the amounts of revenues and expenses that are not readily apparent from other sources. To the extent that there are material differences between these estimates and actual results, our future financial statement presentation, financial condition, results of operations could ~~materially differ from those estimates.~~ be impacted.

We ~~have not identified any~~believe the following critical accounting ~~policies:~~estimates most significantly affect the portrayal of our financial condition and involve our most difficult and subjective estimates and judgments.

Impairment of Goodwill and Intangible Assets

~~Recent~~Goodwill represents the excess of the purchase price in a business combination over the fair value of net tangible and intangible assets acquired. Goodwill in fresh-start accounting ~~standards~~results when the reorganization value of the emerging entity exceeds what can be attributed to specific tangible or identified intangible assets. We test goodwill for impairment during the fourth quarter every year in accordance with ASC 350, Intangibles — Goodwill (“ASC 350”). In connection with the impairment evaluation, the Company may first consider qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not (i.e., a likelihood of more than 50%) that the fair value of a reporting unit is less than its carrying amount. Performing a quantitative goodwill impairment test is not necessary if an entity determines based on this assessment that it is not more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company fails or elects to bypass the qualitative assessment, the goodwill impairment test must be performed. This test requires a comparison of the carrying value of the reporting unit to its estimated fair value. If the carrying value of a reporting unit’s goodwill exceeds its implied fair value, an impairment loss equal to the difference is recorded, not to exceed the amount of goodwill allocated to the reporting unit. In determining reporting units, the Company first 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 of that component.

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~~Management~~

Intangible assets arising from business combinations are generally recorded based upon estimates of the future performance and cash flows from the acquired business. We use an income approach to determine the estimated fair value of certain identifiable intangible assets including customer relationships and trade names and use a cost approach for other identifiable intangible assets, including developed software/courseware. The income approach determines fair value by estimating the after-tax cash flows attributable to an identified asset over its useful life (Level 3 inputs) and then discounting these after-tax cash flows back to a present value. The cost approach determines fair value by estimating the cost to replace or reproduce an asset at current prices and is reduced for functional and economic obsolescence. Developed technology represents patented and unpatented technology and know-how. Customer contracts and relationships represents established relationships with customers, which provide a ready channel for the sale of additional content and services. Trademarks and tradenames represent acquired product names and marks that we intend to continue to utilize.

We review 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 are not 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.

We review indefinite-lived intangible assets, including goodwill and certain trademarks, during the fourth 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.

During the three months ended April 30, 2022, our Global Knowledge business experienced a decline in bookings compared to the corresponding period in the prior year, which will likely lead to lower revenue for the reporting unit for the three months ended July 31, 2022 due to the lag of bookings converting into GAAP revenue. When considering whether events or changes in circumstances might indicate that the carrying amount of Global Knowledge reporting unit goodwill and other intangible assets may not be recoverable, we concluded that no such events and changes in circumstances were present during the three months ended April 30, 2022 since our long-term outlook for our Global Knowledge business has not changed as we continue to invest in our salesforce and product offerings. Based on these considerations, management does not believe there are indicators of impairment as of April 30, 2022. In the event we continue to experience operating performance in our Global Knowledge business that ~~any~~is below our expectations in future periods, such factors could result in a decline in the fair value of the reporting unit, and we may be required to record impairments of goodwill and other identified intangible assets.

Stock-based Compensation

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

Recent Accounting Pronouncements

Our recently ~~issued, but not yet effective,~~adopted and to be adopted accounting pronouncements ~~if currently adopted, would have a material effect on our financial statements.~~are set forth in Note 2 of the Notes to Unaudited Condensed Consolidated Financial Statements for the quarterly period ended April 30, 2022.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable as a smaller reporting company.

~~Item 3. Quantitative and Qualitative Disclosures About Market Risk~~

As of June 30, 2019, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 180 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.

ITEM 4. CONTROLS AND PROCEDURES

~~Item 4. Controls and Procedures~~

~~Evaluation of Disclosure~~ Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed ~~by us~~ in our reports filed or submitted under the Exchange Act, ~~reports~~ is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and ~~forms,~~forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that ~~such~~ information required to be disclosed in our reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our ~~principal executive officer~~Chief Executive Officer and ~~principal financial officer or persons performing similar functions, as appropriate~~Chief Financial Officer, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

~~Under~~

As of the end of the period covered by this Quarterly Report on Form 10-Q, we conducted an evaluation, under the supervision and with the participation of our management, including our ~~principal executive officer~~Chief Executive Officer and ~~principal financial and accounting officer, we conducted an evaluation of the effectiveness~~Chief Financial Officer, of our disclosure controls and procedures ~~as of the end of the fiscal quarter ended June 30, 2019, as such term is~~(as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange ~~Act.~~Act). Based on ~~this~~the evaluation of these disclosure controls and procedures, our ~~principal executive officer~~Chief Executive Officer and ~~principal financial and accounting officer have~~Chief Financial Officer concluded that, ~~during the period covered by this report,~~as of April 30, 2022, our disclosure controls and procedures were effective ~~at a reasonable assurance level and, accordingly, provided reasonable assurance~~to ensure that the information required to be disclosed by us in reports ~~filed~~that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms.

Changes in Internal Control over Financial Reporting

~~There was~~Other than the implementation of certain changes commensurate with the scale of our operations subsequent to the completion of the Skillsoft Merger and the Global Knowledge Merger, there were no ~~change~~changes in our internal control over financial reporting ~~that occurred~~ during the ~~fiscal quarter of 2019~~period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II -– OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

Incorporated by reference herein is information regarding legal proceedings as set forth under “Litigation” contained in Note 10 – “Leases, Commitments and Contingencies” in the Notes to the Unaudited Condensed Consolidated Financial Statements in Item 1 of Part I of this Form 10-Q.

~~Item 1. Legal Proceedings.~~

~~None.~~

ITEM 1A. RISK FACTORS.

~~Item 1A. Risk Factors.~~

~~Factors that could cause our actual results~~In addition to ~~differ materially from those~~the other information set forth in this Quarterly Report, ~~are any of~~you should carefully consider the factors discussed in Part I, Item 1A Risk Factors in our Annual Report on Form 10-K for our fiscal year ended January 31, 2022. The risks discussed in our Annual Report on Form 10-K could materially affect our business, financial condition and future results. The risks described in our ~~Registration Statement filed with~~Annual Report on Form 10-K are not the ~~SEC. Any of these factors could result in a significant or material adverse effect on our results of operations or financial condition.~~only risks facing us. Additional ~~risk factors~~risks and uncertainties not ~~presently~~currently known to us or that we currently deem ~~immaterial~~to be insignificant also may ~~also impair~~materially and adversely affect our business, financial condition or operating results ~~of operations. As of~~in the ~~date of this Quarterly Report, there have been no material changes to the risk factors disclosed in our Registration Statement filed with the SEC.~~future.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

~~Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.~~

In May 2019, the Sponsor purchased 8,625,000 Founder Shares of the Company for an aggregate price of $25,000. On June 7, 2019, we effected a stock dividend of one-third of a share of Class B common stock for each outstanding share of Class B common stock, resulting in our initial stockholders holding an aggregate of 11,500,000 founder shares. On June 26, 2019, we effected a further stock dividend of one-half of a share of Class B common stock for each outstanding share of Class B common stock, resulting in our initial stockholders holding an aggregate of 17,250,000 founder shares. The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

On July 1, 2019, we consummated the Initial Public Offering of 69,000,000 Units, which includes the full exercise by the underwriters of their over-allotment option of 9,000,000 Units. The Units sold in the Initial Public Offering, including pursuant to the over-allotment option, were sold at an offering price of $10.00 per unit, generating total gross proceeds of $690,000,000. Citigroup Global Markets Inc. acted as sole book-running manager of the Initial Public Offering. The securities in the offering were registered under the Securities Act on a registration statement on Form S-1 (No. 333-232057). The Securities and Exchange Commission declared the registration statement effective on June 26, 2019.

Simultaneous with the consummation of the Initial Public Offering, we consummated the private placement of an aggregate of 15,800,000 Private Placement Warrants to the Sponsor at a price of $1.00 per Private Placement Warrant, generating total proceeds of $15,800,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.

The Private Placement Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.

~~Of the gross proceeds received from the Initial Public Offering and the Private Placement Warrants, $690,000,000 was placed in the Trust Account.~~

We paid a total of $12,212,000 in underwriting discounts and commissions and $736,807 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer up to $21,371,000 in underwriting discounts and commissions.

~~For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Form 10-Q.~~

~~Item~~ITEM 3. ~~Defaults Upon Senior Securities.~~

DEFAULTS UPON SENIOR SECURITIES.

None.

~~Item~~ITEM 4. ~~Mine Safety Disclosures.~~

MINE SAFETY DISCLOSURES.

Not ~~Applicable.~~applicable.

~~Item~~ITEM 5. ~~Other Information.~~

OTHER INFORMATION.

None.

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ITEM 6. EXHIBITS.

~~Delaware~~		~~83-4388331~~
Delaware		83-4388331
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

300 Innovative Way, Suite 201 Nashua, New Hampshire03062 (Address of principal executive offices)

Title of each class		Trading Symbol(s)	Name of each exchange on which registered
~~Units,~~ Class A Common Stock, par value $0.0001 per share Warrants, each ~~consisting of~~whole warrant exercisable for one share of Class A common stock ~~$0.0001 par value, and one-third of one warrant~~	SKIL SKIL.WS	~~CCX.U~~	New York Stock Exchange
~~Shares of Class A common stock~~		~~CCX~~	New York Stock Exchange
~~Warrants~~		~~CCX WS~~	~~New York Stock Exchange~~


Large accelerated filer☐	¨	Accelerated filer	¨☐
Non-accelerated filer☒	x	Smaller reporting company	x☒
	Emerging growth company☒	x

		~~Page~~ PAGE NO.
~~Part I. Financial Information~~PART I — FINANCIAL INFORMATION - UNAUDITED
Item 1. Unaudited Financial ~~Statements~~Statements:		4
Unaudited Condensed Consolidated Balance ~~Sheet~~Sheets as of April 30, 2022 (Successor) and January 31, 2022 (Successor)		1 4
Unaudited Condensed ~~Statement~~Consolidated Statements of Operations for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH))		2 5
Unaudited Condensed ~~Statement Changes in Stockholder’s Equity~~Consolidated Statements of Comprehensive Loss for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH))		3 6
Unaudited Condensed ~~Statement~~Consolidated Statements of Stockholders’ Equity for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH))	7
Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended April 30, 2022 (Successor) and April 30, 2021 (Predecessor (SLH))		4 9
Notes to Unaudited Condensed Consolidated Financial Statements		5 11
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		12 36
Item 3. Quantitative and Qualitative Disclosures ~~Regarding~~about Market Risk		14 48
Item 4. Controls and Procedures		14 48
~~Part II. Other Information~~PART II — OTHER INFORMATION		49
Item 1. Legal Proceedings		15 49
Item 1A. Risk Factors		15 49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		15 49
Item 3. Defaults Upon Senior Securities		15 49
Item 4. Mine Safety Disclosures		15 49
Item 5. Other Information		15 49
Item 6. Exhibits		16 32
~~Part III. Signatures~~SIGNATURES		17 51

ASSETS
Current asset – cash	$	7,872
Deferred offering costs		317,110
Total Assets	$	324,982

LIABILITIES AND STOCKHOLDER’S EQUITY
Current liabilities:
Accrued expenses	$	1,000
Accrued offering costs		99,982
Promissory note – related party		200,000
Total Current Liabilities		300,982

Commitments

Stockholder’s Equity
Preferred stock, $0.0001 par value; 1,000,000 authorized; none issued and outstanding		—
Class A Common stock, $0.0001 par value; 200,000,000 shares authorized; none issued and outstanding		—
Class B Common stock, $0.0001 par value; 20,000,000 shares authorized; 17,250,000 shares issued and outstanding⁽¹⁾		1,725
Additional paid-in capital		23,275
Accumulated deficit		(1,000	)
Total Stockholder’s Equity		24,000
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY	$	324,982

Formation costs	$	1,000
Net Loss	$	(1,000	)

Weighted average shares outstanding, basic and diluted⁽¹⁾		15,000,000

Basic and diluted net loss per common share	$	(0.00	)

	Common Stock⁽¹⁾				Additional Paid		Accumulated			Total Stockholder’s
	Shares		Amount		in Capital		Deficit			Equity
Balance – April 11, 2019 (inception)		—	$	—	$	—	$	—		$	—

Issuance of Class B common stock to Sponsor⁽¹⁾		17,250,000		1,725		23,275		—			25,000

Net loss		—		—		—		(1,000	)		(1,000	)

Balance – June 30, 2019		17,250,000	$	1,725	$	23,275	$	(1,000	)	$	24,000