What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2022-04-01 compared with 2021-03-31 · 456 added, 484 removed, 1170 unchanged (45% of the section changed)

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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Reports of Independent Registered Public Accounting Firms 61

Report of Independent Registered Public Accounting Firm (PCAOB ID 271 )

Report of Independent Registered Public Accounting Firm (PCAOB ID 1263 )

Consolidated Balance Sheets

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Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheet of BlackBerry Limited and its subsidiaries (together, the Company) as of February 28, 2021 and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the year then ended, including the related notes (collectively referred to as the consolidated financial statements).

We have audited the accompanying consolidated balance sheets of BlackBerry Limited and its subsidiaries (together, the Company) as of February 28, 2022 and 2021, and the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the years then ended, including the related notes (collectively referred to as the consolidated financial statements).

We also have audited the Company's internal control over financial reporting as of February 28, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 28, 2021 and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 28, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 28, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

Change in Accounting Principles

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for the allowance for credit losses as of March 1, 2020 and the manner in which it accounts for leases as of March 1, 2019.

Change in Accounting Principle

As discussed in Note 1 to the consolidated financial statements, the Company changed the manner in which it accounts for the allowance for credit losses as of March 1, 2020.

Basis for Opinions

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audit.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audit of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinions.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable

assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail,

accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Goodwill impairment test

Goodwill impairment test for the selected reporting units using the income approach

As described in Notes 1, 3 and 4 to the consolidated financial statements, the Company’s goodwill balance was $844 million as of February 28, 2022.

A significant portion of the goodwill balance related to certain reporting units for which the income approach was used as the primary basis for determining fair value (the Selected Reporting Units).

Management conducts a goodwill impairment test as of December 31 of each year, or more frequently if events or changes in circumstances indicate that the asset may be impaired.

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When the carrying value of a reporting unit exceeds its fair value, goodwill of the reporting unit is considered to be impaired and written down to its fair value.

As disclosed by management, during the year ended February 28, 2021, as a result of the deterioration in economic conditions caused by the global COVID-19 pandemic and its impact on the Company’s reporting units, and the decline of the trading value of the Company’s capital stock below the Company’s consolidated carrying value, management determined that it was more likely than not that the fair value of at least one of its reporting units was lower than its carrying amount after including goodwill.

As a result, management completed an analysis of the fair values of its reporting units to compare against their respective carrying values as of May 31, 2020.

Based on the results of the goodwill impairment test, the Company recorded total goodwill impairment charges of $594 million in the first quarter of fiscal 2021, relating to the BlackBerry Spark reporting unit.

No additional goodwill impairment was identified during the Company’s annual impairment test as of the annual test date of December 31, 2020.

The estimated fair values of reporting units were determined utilizing multiple valuation techniques, which included the income approach using a discounted future cash flow model, the market-based approach, and the asset value approach.

As disclosed by management, the analysis requires significant judgment in estimating future cash flows, especially in light of the ongoing COVID-19 pandemic and its short-term and potential long-term impacts to the Company’s business and assumptions, including the long-term rates of revenue growth for the reporting units, terminal growth rates, profitability measures and determination of the discount rates for the reporting units.

The principal considerations for our determination that performing procedures relating to the goodwill impairment test is a critical audit matter are (i) the significant judgment by management when determining the fair values of the reporting units, including the short-term and potential long-term impacts of the COVID-19 pandemic to the Company’s business;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimated future cash flows including long-term rates of revenue growth, terminal growth rates, profitability measures, and the discount rates;

The estimated fair values of reporting units were determined utilizing multiple valuation techniques, which included the income approach using a discounted future cash flow model, market-based approaches, and the asset value approach.

Estimating the fair values of reporting units using discounted future cash flow models requires significant judgment by management, including estimation of future cash flows, which is dependent on estimation of the long-term rates of revenue growth, terminal growth rates, profitability measures, and determination of the discount rates.

Based on the result of the annual impairment test, management’s estimates indicated the fair values of all the reporting units substantially exceeded their carrying values and no goodwill impairment charge needed to be recorded.

The principal considerations for our determination that performing procedures relating to the goodwill impairment test for the Selected Reporting Units using the income approach is a critical audit matter are (i) the significant judgment by management when determining the fair values of the Selected Reporting Units using the income approach;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to long-term rates of revenue growth, terminal growth rates, profitability measures, and the discount rates;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

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These procedures included testing the effectiveness of controls relating to management’s goodwill impairment test, including controls over the determination of the fair values of the Company’s reporting units.

These procedures also included, among others (i) testing management’s process for determining the fair values of the Company’s reporting units;

(ii) evaluating the appropriateness of the discounted future cash flow models;

(iii) testing the completeness and accuracy of underlying data used in the

discounted future cash flow models;

and (iv) evaluating the significant assumptions used by management related to the estimated future cash flows, long-term rates of revenue growth, terminal growth rates, profitability measures, and the discount rates.

Evaluating management’s assumptions related to the estimated future cash flows including long-term rates of revenue growth and profitability measures involved evaluating whether the assumptions used by management were reasonable considering consistency with (i) current and past performance of each reporting unit (ii) external market and industry data;

and (iii) with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the (i) appropriateness of the Company’s discounted cash flow models and (ii) reasonableness of the discount rates and terminal growth rates.

These procedures over the determination of the fair values of the Selected Reporting Units also included, among others, (i) testing management’s process for determining the fair values;

(ii) testing the completeness and accuracy of underlying data used in the discounted future cash flow models;

(iii) evaluating the appropriateness of the discounted future cash flow models;

and (iv) evaluating the reasonableness of the significant assumptions used by management related to long-term rates of revenue growth, terminal growth rates, profitability measures and the discount rates.

Evaluating management’s assumptions related to long-term rates of revenue growth and profitability measures involved assessing whether the assumptions used by management were reasonable considering consistency with (i) current and past performance of the Selected

Reporting Units;

(ii) external market and industry data;

and (iii) evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the (i) appropriateness of the Company’s discounted future cash flow models;

and (ii) reasonableness of the discount rates and terminal growth rates.

Revenue recognition – Intellectual property licensing

As discussed in Notes 1 and 13 to the consolidated financial statements, $272 million of the Company’s total revenues for the year ended February 28, 2021 was generated from Licensing and Other, which includes revenue from intellectual property licensing arrangements.

As described in Notes 1 and 12 to the consolidated financial statements, $63 million of the Company’s total revenues for the year ended February 28, 2022 was generated from Licensing and Other, which includes revenue from intellectual property licensing arrangements.

Management examines intellectual property agreements on a case-by-case basis to determine whether they contain distinct performance obligations with standalone functionality and whether the Company is the principal or agent in the transaction.

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Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls related to the assessment of contractual terms in the intellectual property agreements which impact on the timing and amount of revenue recognition.

These procedures also included, among others, (i) testing the completeness and accuracy of management’s identification of contractual terms by examining intellectual property agreements on a test basis, and (ii) testing management's process for determining the appropriate amount and timing of revenue recognition based on the contractual terms identified in the intellectual property agreements on a test basis.

These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the assessment of contractual terms in the intellectual property agreements which impact the timing and amount of revenue recognition.

and (ii) testing management's process for determining the appropriate amount and timing of revenue recognition based on the contractual terms identified in the intellectual property agreements on a sample basis.

/s/ PricewaterhouseCoopers LLP

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Toronto, Canada

March 31, 2021

April 1, 2022

We have served as the Company's auditor since 2020.

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Shareholders and Board of Directors of BlackBerry Limited:

To the Board of Directors and Shareholders of BlackBerry Limited

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of BlackBerry Limited (the Company) as of February 29, 2020, the related consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for each of the two years in the period ended February 29, 2020, and the related notes (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 29, 2020, and the results of its operations and its cash flows for each of the two years in the period ended February 29, 2020, in conformity with United States generally accepted accounting principles.

We have audited the accompanying consolidated financial statements of BlackBerry Limited (the “Company”) as of February 29, 2020, comprised of the consolidated statements of operations, comprehensive income (loss), shareholders’ equity and cash flows for the year ended February 29, 2020, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated results of operations and cash flows of the Company for the year ended February 29, 2020, in conformity with United States generally accepted accounting principles.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audit.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

We served as the Company’s auditor from 1997 to 2020.

We believe that our audit provides a reasonable basis for our opinion.

/s/ Ernst & Young LLP

Chartered Professional Accountants

Licensed Public Accountants

We served as the Company's auditor from 1997 to 2020.

Waterloo, Canada

April 6, 2020

April 6, 2020, except for note 12 which is as of April 1, 2022

BlackBerry Limited

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Short-term investments (note 3) 334 525

Accounts receivable, net of allowance of $10 and $9, respectively (note 2 and note 4) 182 215

Other receivables 25 14

Accounts receivable, net of allowance of $ 4 and $ 10 , respectively (note 4)

Other receivables (note 4) 25 25

Income taxes receivable 9 10

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Income taxes payable (note 5) 11 6

Debentures (note 7) — 606

Deferred revenue, current (note 12) 207 225

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Operating lease liabilities (note 11)

Other long-term liabilities (note 4) 6 9

Other long-term liabilities 4 6

Long-term debentures (note 6) 507 720

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On behalf of the Board:

Chen Barbara Stymiest

Chen Lisa Disbrow

Director Director

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Paid-in Capital Deficit Accumulated

Comprehensive Loss Total

Comprehensive Income (Loss) Total

Balance as at February 28, 2019 $ 2,688 $ ( 32 ) $ ( 20 ) $ 2,636

Net income — 93 — 93

Net loss — ( 152 ) — ( 152 )

Other comprehensive loss — — ( 13 ) ( 13 )

Cumulative impact of adoption of ASC 842 — ( 14 ) — ( 14 )

Cumulative impact of adoption of ASU 2016-01 6 ( 6 )

Stock-based compensation (note 7) 63 — — 63

Value of pre-combination service related to Replacement Awards included in purchase consideration (note 8) 21 — — 21

Shares issued:

Exercise of stock options (note 7) 3 — — 3

Exchange shares related to Cylance acquisition 35 — — 35

Employee share purchase plan (note 7) 6 — — 6

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Net loss — ( 1,104 ) — ( 1,104 )

Other comprehensive loss — — ( 13 ) ( 13 )

Other comprehensive income — — 20 20

Cumulative impact of adoption of ASC 326 — ( 4 ) — ( 4 )

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Balance as at February 28, 2021 2,823 ( 1,306 ) ( 13 ) 1,504

Net loss — ( 1,104 ) — ( 1,104 )

Other comprehensive income — — 20 20

Cumulative impact of adoption of ASC 326 — ( 4 ) — ( 4 )

Net income — 12 — 12

Other comprehensive loss — — ( 6 ) ( 6 )

Stock-based compensation (note 7) 36 — — 36

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Debentures fair value adjustment (note 6) ( 212 ) 372 ( 66 )

Settlements, net (note 11) — — ( 9 )

469 1,750 912

Operating income (loss) ( 1,107 ) ( 149 ) 60

Investment income (loss), net ( 6 ) 1 17

Operating loss ( 2 ) ( 1,107 ) ( 149 )

Investment income (loss), net (note 3 and note 6) 21 ( 6 ) 1

Income (loss) before income taxes 19 ( 1,113 ) ( 148 )

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Other comprehensive income (loss)

Net change in unrealized gains (losses) on available-for-sale investments (note 10) — ( 2 ) 1

Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the year (note 10) 2 ( 1 ) 1

Net change in unrealized losses on available-for-sale investments (note 9) — — ( 2 )

Net change in fair value and amounts reclassified to net income (loss) from derivatives designated as cash flow hedges during the year (note 9) ( 1 ) 2 ( 1 )

Foreign currency translation adjustment ( 6 ) 5 ( 3 )

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Net income (loss) $ 12 $ ( 1,104 ) $ ( 152 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Amortization 176 198 212

Deferred income taxes ( 3 ) — ( 25 )

Stock-based compensation 36 44 63

Impairment of goodwill 594 22 —

Impairment of long-lived assets 43 10 —

Gain on sale of investment (note 3) ( 22 ) — —

Impairment of goodwill (note 3) — 594 22

Impairment of long-lived assets (note 3)

Non-cash consideration received from contracts with customers — — ( 8 )

Debentures fair value adjustment (note 6) ( 212 ) 372 ( 66 )

Other long-term liabilities ( 3 ) 2 ( 12 )

Operating leases ( 16 ) ( 4 ) ( 9 )

Other ( 3 ) ( 5 ) 12

Net changes in working capital items

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Deferred revenue ( 50 ) ( 79 ) ( 18 )

Net cash provided by operating activities 82 26 100

Net cash provided by (used in) operating activities ( 28 ) 82 26

Cash flows from investing activities

Acquisition of long-term investments ( 1 ) ( 5 ) ( 1 )

Proceeds on sale or maturity of long-term investments — 19 2

Proceeds on sale, maturity or distribution from long-term investments 35 — 19

Acquisition of property, plant and equipment ( 8 ) ( 8 ) ( 12 )

Proceeds on sale of property, plant and equipment — — 1

Acquisition of intangible assets ( 31 ) ( 36 ) ( 32 )

Business acquisitions, net of cash acquired — — 1

Acquisition of restricted short-term investments ( 24 ) — —

Acquisition of short-term investments ( 916 ) ( 1,039 ) ( 1,180 )

Acquisition of restricted short-term investments — ( 24 ) —

Proceeds on sale or maturity of restricted short-term investments 24 — —

Proceeds on sale or maturity of short-term investments 1,104 1,047 1,017

Net cash used in investing activities ( 65 ) ( 188 ) ( 375 )

Net cash provided by (used in) investing activities 207 ( 65 ) ( 188 )

Cash flows from financing activities

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Effect of foreign exchange gain (loss) on cash, cash equivalents, restricted cash, and restricted cash equivalents ( 1 ) 2 ( 1 )

Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period ( 208 ) ( 156 ) ( 273 )

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period 188 ( 208 ) ( 156 )

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period 218 426 582

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BlackBerry Limited (the “Company”) provides intelligent security software and services to enterprises and governments around the world.

The Company secures more than 500 million endpoints including more than 175 million cars on the road today.

The Company secures more than 500 million endpoints including more than 195 million vehicles.

Based in Waterloo, Ontario, the Company leverages artificial intelligence and machine learning to deliver innovative solutions in the areas of cybersecurity, safety and data privacy, and is a leader in the areas of endpoint security, endpoint management, encryption, and embedded systems.

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Certain of the comparative figures have been reclassified to conform to the current year’s presentation.

The Company operates as a single operating segment.

For additional information concerning the Company’s segment reporting, see Note 13.

In the first quarter of fiscal 2022, the Chief Operating Decision Maker (“CODM”), who is the Executive Chair and Chief Executive Officer (“CEO”) of the Company, began making decisions and assessing the performance of the Company using three operating segments, whereas the CODM previously made decisions and assessed the performance of the Company as a single operating segment.

As a result of the internal reporting reorganization, the Company is now organized and managed as three reportable operating segments:

Cybersecurity, IoT (collectively, “Software & Services”), and Licensing and Other, as further discussed in Note 12.

Risks and Uncertainties

In March 2020, the World Health Organization characterized the novel coronavirus (“COVID-19”) as a global pandemic and extraordinary actions have been taken by international, federal, state, provincial and local governmental authorities to contain and combat the spread of COVID-19 in regions throughout the world.

The COVID-19 pandemic and related public health measures, including orders to shelter-in-place, travel restrictions and mandated business closures, have adversely affected workforces, organizations, consumers and economies leading to an economic downturn and increased market volatility.

In fiscal 2021, the economic downturn and uncertainty caused by the COVID-19 pandemic and the measures undertaken to contain its spread negatively affected the Company’s QNX automotive software business and caused volatility in demand for the Company’s products and services, adversely affected the ability of the Company’s sales and professional services teams to work with customers, impacted spending from new customers and increased sales cycle times.

The uncertainty also resulted in the Company making significant judgments related to its estimates and assumptions concerning the impairment of goodwill, indefinite-lived intangible assets, certain operating lease right-of-use (“ROU”) assets and associated property, plant and equipment, and concerning the collectability of receivables.

As of the date of issuance of the financial statements, the Company is not aware of any additional events or circumstances which would require it to update its estimates, judgments, or revise the carrying value of its assets or liabilities, other than the COVID-19 pandemic as discussed above and below in Note 3.

In fiscal 2022 and fiscal 2021, the economic downturn and uncertainty caused by the novel coronavirus (“COVID-19”) resulted in the Company making significant judgments related to its estimates and assumptions concerning the impairment of goodwill, indefinite-lived intangible assets, certain operating lease right-of-use (“ROU”) assets and associated property, plant and equipment, and concerning the collectability of receivables.

These estimates may change, as new events occur and additional information is obtained, and such changes will be recognized in the consolidated financial statements as soon as they become known.

Actual results could differ from these estimates and any such differences may be material to the Company’s financial statements.

Although the Company experienced higher Software & Services revenue in the fourth quarter of fiscal 2021 compared to the first quarter of fiscal 2021, when the COVID-19 pandemic first materially negatively impacted the Company’s operations, and observed a partial recovery in global automotive production volumes by the end of the fiscal year, the COVID-19 pandemic and related global chip shortage have had and, in fiscal 2022, may continue to have a material adverse impact on the Company’s QNX automotive software business in particular and on the Company’s business, results of operations and financial condition on a consolidated basis.

The Company continues to evaluate the current and potential impact of the pandemic on its business, results of operations and consolidated financial statements, including the potential impairment of goodwill and indefinite-lived intangible assets.

The Company does not expect the COVID-19 pandemic and its related economic impact to materially adversely affect its liquidity position.

The ultimate impact of the COVID-19 pandemic on the Company’s operational and financial performance will depend on, among other things, the pandemic’s duration and severity, the governmental restrictions that may be sustained or imposed in response to the pandemic, the effectiveness of actions taken to contain or mitigate the pandemic (including the availability and distribution of vaccines), the impact of the global chip shortage and global economic conditions.

The long-term impact of the COVID-19 pandemic on the Company’s business may not be fully reflected until future periods.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Accounting Policies and Critical Accounting Estimates

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Actual results could differ from these estimates, which were based upon circumstances that existed as of the date of the consolidated financial statements, February 28, 2022.

Subsequent to this date, it is reasonably possible that the COVID-19 pandemic and its impact on the health of the global economy could cause changes to estimates as a result of the financial circumstances of the markets in which the Company operates and the price of the Company’s publicly traded equity in comparison to the Company’s carrying value.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The significant accounting policies used in these U.S.

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Cash and cash equivalents consist of balances with banks and liquid investments with maturities of three months or less at the date of acquisition.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Accounts receivable, net of allowance

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If circumstances related to specific customers change, the Company’s estimates of the recoverability of accounts receivable balances could be further adjusted

For periods prior to the adoption of ASC 326, the accounts receivable balance reflects invoiced and accrued revenue and is presented net of an allowance for doubtful accounts.

For the year prior to adoption of ASC 326, the accounts receivable balance reflects invoiced and accrued revenue and is presented net of an allowance for doubtful accounts.

The allowance for doubtful accounts reflects estimates of probable losses in the accounts receivable balance.

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If circumstances related to specific customers changed, the Company’s estimates of the recoverability of accounts receivable balances may have been further adjusted.

The Company’s cash equivalents and investments, other than publicly issued equity securities and private equity investments without readily determinable fair value, consist of money market and other debt securities, which are classified as available-for-sale for accounting purposes and are carried at fair value.

Unrealized gains and losses, net of related income taxes, are recorded in AOCL until such investments mature or are sold.

The Company’s cash equivalents and investments, other than publicly issued equity securities and non-marketable equity investments without readily determinable fair value, consist of money market and other debt securities, which are classified as available-for-sale for accounting purposes and are carried at fair value.

Unrealized gains and losses, net of

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

related income taxes, are recorded in AOCL until such investments mature or are sold.

The Company uses the specific identification method of determining the cost basis in computing realized gains or losses on available-for-sale investments, which are recorded in investment income.

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Publicly issued equity securities are recorded at fair value and revalued at each reporting period with changes in fair value recorded through investment income.

The Company elects to record private equity investments without readily determinable fair value at cost minus impairment, and adjusted for any changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

The Company reassesses each reporting period that its private equity investments without readily determinable fair value continue to qualify for this treatment.

The Company elects to record non-marketable equity investments without readily determinable fair value at cost minus impairment, and adjusted for any changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer.

The Company reassesses each reporting period that its non-marketable equity investments without readily determinable fair value continue to qualify for this treatment.

Investments with maturities at the time of purchase of three months or less are classified as cash equivalents.

Investments with maturities of one year or less (but which are not cash equivalents), public equity investments and any investments that the Company intends to hold for less than one year are classified as short-term investments.

Investments with maturities in excess of one year or investments that the Company does not intend to sell are classified as long-term investments.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Investments with maturities in excess of one year, non-marketable equity investments without readily determinable fair value and investments that the Company does not intend to sell are classified as long-term investments.

Allowance for Credit Losses on Available-for-sale Debt Securities

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The Company does not use derivative financial instruments for speculative purposes.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The Company records all derivative instruments at fair value on the consolidated balance sheets.

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and the method of assessing hedge effectiveness.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

anticipated transaction is deemed no longer likely to occur, the corresponding derivative instrument is de-designated as a hedge and any associated unrealized gains and losses in AOCL are recognized in income at that time.

If an anticipated transaction is deemed no longer likely to occur, the corresponding derivative instrument is de-designated as a hedge and any associated unrealized gains and losses in AOCL are recognized in income at that time.

Any future changes in the fair value of the instrument are recognized in current income.

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Amortization is provided using the following rates and methods:

Buildings, leasehold improvements and other Straight-line over terms between 5 and 15 years

Leasehold improvements and other Straight-line over terms between 5 and 15 years

BlackBerry operations and other information technology Straight-line over terms between 3 and 5 years

2 unchanged sentences

For amortization on ROU assets, see the Company’s accounting policy on leases below and Note 11 for the remaining lease terms of leases.

On March 1, 2019, the Company adopted the new standard on leases, Accounting Standards Codification 842 (“ASC 842”).

Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

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The Company has building, car and data center lease agreements with lease and non-lease components that are accounted for separately.

For lease terms of 12 months or less on the commencement date, the Company does not apply the ASC 842 recognition requirements and recognizes the lease payments as lease cost on a straight-line basis over the lease term.

Prior to the adoption of ASC 842, the Company classified leases as either capital or operating leases.

Capital leases were capitalized on the consolidated balance sheet and reported on the consolidated statement of operations.

Operating leases were considered off-balance sheet transactions and expensed as incurred.

For lease terms of 12 months or less on the commencement date, the Company does not apply the Accounting Standards Codification 842 recognition requirements and recognizes the lease payments as lease cost on a straight-line basis over the lease term.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

See Note 11 for additional information related to the Company’s leases.

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These events and circumstances may include a significant change in legal factors or in the business climate, a significant decline in the Company’s share price, an adverse action or assessment by a regulator, unanticipated competition, a loss of key personnel, significant disposal activity and the testing of recoverability for a significant asset group.

On March 1, 2020 the Company adopted ASU 2017-04 on the topic of Intangibles— Goodwill and Other (ASC 350).

ASU 2017-04 simplifies the subsequent measurement of goodwill, enabling the Company to carry out its goodwill

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

impairment test in one step, instead of two steps.

On March 1, 2020, the Company adopted Accounting Standards Update 2017-04 on the topic of Intangibles - Goodwill and Other (ASC 350) (“ASU 2017-40”).

ASU 2017-04 simplifies the subsequent measurement of goodwill, enabling the Company to carry out its goodwill impairment test in one step, instead of two steps.

In the test, the carrying value of the reporting unit, including goodwill, was compared with its fair value.

The estimated fair value was determined utilizing multiple approaches based on the nature of the reporting units being valued.

In its analysis, the Company utilized multiple valuation techniques, including the income approach using a discounted future cash flow model, the market-based approach, and the asset value approach.

In its analysis, the Company utilized multiple valuation techniques, including the income approach using a discounted future cash flow model, market-based approaches, and the asset value approach.

The analysis requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rates of revenue growth for the Company’s reporting units, estimation of the useful life over which cash flows will occur, terminal growth rates, profitability measures, and determination of the discount rates for the reporting units.

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The estimated fair value was determined utilizing multiple approaches based on the nature of the reporting units being valued.

In its analysis, the Company utilized multiple valuation techniques, including the income approach, discounted future cash flows, the market-based approach, and the asset value approach.

In its analysis, the Company utilized multiple valuation techniques, including the income approach, discounted future cash flows, market-based approaches, and the asset value approach.

The analysis requires significant judgment, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of revenue growth for our reporting units, estimation of the useful life over which cash flows will occur, terminal growth rate, profitability measures, and determination of the discount rates for the reporting units.

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Using the impaired reporting units’ fair value determined in step one as the acquisition prices in hypothetical acquisitions of the reporting units, the implied fair values of goodwill were calculated as the residual amount of the acquisition price after allocations made to the fair values of net assets, including working capital, property, plant and equipment and both recognized and unrecognized intangible assets.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Intangible assets

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The Company reviews long-lived assets (“LLA”) such as property, plant and equipment, intangible assets with finite useful lives and ROU assets for impairment whenever events or changes in circumstances indicate that the carrying value of the asset or asset group may not be recoverable.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

history or forecast of future operating or cash flow losses, significant disposal activity, a significant decline in the Company’s share price, a significant decline in revenue or adverse changes in the economic environment.

These events and circumstances may include significant decreases in the market price of an asset or asset group, significant changes in the extent or manner in which an asset or asset group is being used by the Company or in its physical condition, a significant change in legal factors or in the business climate, a history or forecast of future operating or cash flow losses, significant disposal activity, a significant decline in the Company’s share price, a significant decline in revenue or adverse changes in the economic environment.

The LLA impairment test requires the Company to identify its asset groups and test impairment of each asset group separately.

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The Company reviews any changes in events and circumstances that have occurred on a quarterly basis to determine if indicators of LLA impairment exist.

Business acquisitions

The Company accounts for its acquisitions using the acquisition method whereby identifiable assets acquired and liabilities assumed are measured at their fair values as of the date of acquisition.

The excess of the acquisition price over such fair value, if any, is recorded as goodwill, which is not expected to be deductible for tax purposes.

The Company includes the operating results of each acquired business in the consolidated financial statements from the date of acquisition.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The Company recognizes its liability for royalties in accordance with the terms of existing license agreements.

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1.75% Debentures

The fair value of the 3.75% Debentures (as defined in Note 7) was determined using the significant inputs of principal value, interest rate spreads and curves, embedded call option prices, observable trades of the Debentures, the market price and volatility of the Company’s listed common shares and the Company’s implicit credit spread.

1.75% Debentures

The fair value of the 1.75% Debentures (as defined in Note 6) has been determined using the significant inputs of principal value, interest rate spreads and curves, any observable trades of the Debentures that occurred during the period, the market price and volatility of the Company’s listed common shares, and the significant Level 3 inputs related to credit spread and the implied discount of the 1.75% Debentures at issuance.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

3.75% Debentures

The fair value of the 3.75% Debentures (as defined in Note 6) was determined using the significant inputs of principal value, interest rate spreads and curves, embedded call option prices, observable trades of the Debentures, the market price and volatility of the Company’s listed common shares and the Company’s implicit credit spread.

Revenue recognition

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For each of the Company’s major categories of revenue, the following paragraphs describe the applicable specific revenue recognition policy, and when the Company satisfies its performance obligations.

Nature of products and services

The Company is organized and managed as one operating segment.

The Company has multiple products and services from which it derives revenue, which are structured in two groups:

Software and Services, and Licensing and Other.

Software and Services

Software and Services includes revenue from the Company’s BlackBerry Spark® software platform and BlackBerry IoT Solutions.

Software and Services revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Nature of products and services

The Company is organized and managed as three operating segments.

The Company has multiple products and services from which it derives revenue, which are structured in three groups:

Cybersecurity, IoT and Licensing and Other.

Cybersecurity

Cybersecurity includes revenue from the Company’s BlackBerry Spark® software platform, BlackBerry® AtHoc®, BlackBerry® Alert, BlackBerry® SecuSUITE® and BlackBerry Messenger (BBM®) Enterprise.

Cybersecurity revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

BlackBerry Spark

The BlackBerry Spark platform is a comprehensive offering of security software products and services, including the BlackBerry Spark® Unified Endpoint Security Suite and the BlackBerry Spark® Unified Endpoint Management Suite, which are also marketed together as the BlackBerry Spark® Suites, offering the Company’s broadest range of tailored cybersecurity and endpoint management options.

The BlackBerry Spark UES Suite includes revenue from the Company’s Cylance® artificial intelligence and machine learning-based platform consisting of BlackBerry® Protect, BlackBerry® Optics, BlackBerry® Persona, BlackBerry® Guard managed services and other cybersecurity applications.

The BlackBerry Spark platform is a comprehensive offering of security software products and services, including the BlackBerry® Cyber Suite and the BlackBerry Spark® Unified Endpoint Management Suite, which are also marketed together as the BlackBerry Spark® Suite, offering the Company’s broadest range of tailored cybersecurity and endpoint management options.

The BlackBerry Spark Cyber Suite includes revenue from the Company’s Cylance® artificial intelligence and machine learning-based platform consisting of BlackBerry® Protect, BlackBerry® Optics, BlackBerry® Persona, BlackBerry® Gateway, BlackBerry® Guard managed services and other cybersecurity applications.

The Company generates software license revenue from term subscription products, which includes technical support, and any updates and upgrades.

The Company also offers the BlackBerry Cyber Suite, which is a UEM-agnostic version of the BlackBerry UES Suite which will be able to integrate with UEM software from other vendors.

The BlackBerry Cyber Suite natively integrates with BlackBerry® UEM and also works with UEM solutions from other vendors.

The Company recognizes the license revenue over the term of the contract beginning on the commencement date of each contract, the date that services are made available to customers.

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Revenue for hourly rate professional services arrangements is recognized as services are performed and revenue for fixed fee professional services is recognized on a proportional performance basis as the services are performed.

BlackBerry Spark® UEM Suite includes the Company’s BlackBerry® UEM, BlackBerry® Dynamics™ and BlackBerry® Workspaces solutions.

The BlackBerry Spark® UEM Suite includes the Company’s BlackBerry® UEM, BlackBerry® Dynamics™ and BlackBerry® Workspaces solutions.

The Company generates software license revenue from both term subscription and perpetual license contracts, both of which are commonly bundled with support, maintenance and professional services.

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Generally, most of the Company’s enterprise software products sold require access to the Company’s proprietary secure network infrastructure in order to function, and therefore the associated revenue is recognized over time, ratably over either the subscription term or expected customer life as described above.

BlackBerry IoT Solutions

BlackBerry IoT Solutions includes revenue from BlackBerry Technology Solutions, which consists of BlackBerry® QNX®, BlackBerry Certicom®, BlackBerry Radar® and other IoT applications, and from Secure Communications which consists of BlackBerry® AtHoc® and SecuSUITE.

BlackBerry® QNX® software license revenue from both term subscription and perpetual contracts is recognized at a point in time when the software is made available to the customer for use, as the software has standalone functionality and the license is distinct in the context of the contract.

The licenses for certain software embedded into hardware such as automotive infotainment systems and advanced driver-assistance systems are sold as a sales-based royalty where intellectual property is the predominant item to which the royalty relates, and are recognized based on actual volumes and underlying sales by the customer of the hardware with the embedded software except in cases where the customer makes a non-refundable prepayment related to its future royalties, in which case consideration is fixed and recognized immediately

BlackBerry® AtHoc® generates revenue from networked crisis communication software from term subscription products, which includes technical support, and associated professional services.

BlackBerry AtHoc and BlackBerry Alert

BlackBerry AtHoc and BlackBerry Alert generate revenue from networked critical event management solutions through term subscriptions which include technical support and associated professional services.

The Company recognizes the license revenue over the term of the contract beginning on the commencement date of each contract, the date that services are made available to customers.

BlackBerry SecuSUITE

SecuSUITE revenue is generated from software license products associated with secure messaging and the associated hardware.

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the hardware is recognized once title and the significant risks and rewards of ownership of the products are transferred to the customer, which occurs after the product has shipped.

IoT consists of BlackBerry Technology Solutions and BlackBerry IVY™.

BlackBerry Technology Solutions includes revenue from BlackBerry® QNX®, BlackBerry Certicom®, BlackBerry Radar® and other IoT applications.

IoT revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

Revenue from technical support is recognized over the support period.

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These agreements may be perpetual or term in nature and grant (i) a limited non-exclusive, non-transferable license to certain of the Company’s patents, (ii) a covenant not to enforce patent rights against the licensee, and (iii) the release of the licensee from certain claims.

The Company examines intellectual property agreements on a case-by-case basis to determine whether the intellectual property contain distinct performance obligations with standalone functionality and whether the Company is the principal or agent in the transaction.

The Company examines intellectual property agreements on a case-by-case basis to determine whether the intellectual property contains distinct performance obligations with standalone functionality and whether the Company is the principal or agent in the transaction.

Significant judgment is applied in assessing contractual terms which could impact the timing and amount of revenue recognition.

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The Company may also recognize revenue related to consideration for past patent royalties in connection with the settlement of patent litigation where there was no prior patent license agreement.

The Company’s BBM Consumer licensing arrangement is a multi-year agreement where the license was not previously separately identifiable from the requirement to maintain interoperability between the licensed BBM Consumer product and the BBM Enterprise product sold by the Company.

The Company’s BBM Consumer licensing arrangement was a multi-year agreement where the license was not previously separately identifiable from the requirement to maintain interoperability between the licensed BBM Consumer product and the BBM Enterprise product sold by the Company.

During fiscal 2020, the licensed BBM Consumer product was shut down by the licensee, removing any requirement for the Company to maintain interoperability and thus all performance obligations were completed.

As a result, the Company estimated the amount for which it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur and recognized that amount as revenue during fiscal 2020.

In fiscal 2017 and fiscal 2018, the Company entered into multiple multi-year license agreements under which the Company licensed its security software and services suite and, in many cases, related brand assets to third parties who design, manufacture, sell and provide customer support for BlackBerry-branded and white-label handsets.

Mobility license revenue for licensees whose sales exceed contractual sales minimums is recognized when licensed products are sold as reported by the Company’s licensees.

For licensees whose sales do not exceed contractual sales minimums, revenue is recognized over time, ratably over the license term based on contractual minimum amounts due to the promise to provide engineering services to the licensees.

Other includes revenue associated with the Company’s legacy SAF business, relating to subscribers utilizing the Company’s legacy BlackBerry 7 and prior operating systems, as well as legacy handheld revenue associated with the release of previously accrued amounts when the Company determines it has no further performance obligations.

SAF revenue is recognized over time as the monthly service is provided.

In instances where the Company invoices the SAF customer prior to performing the service, the pre-billing is recorded as deferred revenue.

See Note 13 for further information, including revenue by major product and service types.

BlackBerry Limited

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In millions of United States dollars, except share and per share data, and except as otherwise indicated

Mobility license revenue for licensees whose sales exceeded contractual sales minimums was recognized when licensed products were sold as reported by the Company’s licensees.

For licensees whose sales did not exceed contractual sales minimums, revenue was recognized over time, ratably over the license term based on contractual minimum amounts due to the promise to provide engineering services to the licensees.

Other includes revenue associated with the Company’s legacy SAF business, relating to subscribers utilizing the Company’s legacy BlackBerry 7 and prior operating systems, which are no longer supported or maintained by the Company as of January 4, 2022.

SAF revenue was recognized over time as the monthly service was provided.

In instances where the Company invoiced the SAF customer prior to performing the service, the pre-billing was recorded as deferred revenue.

See Note 12 for further information, including revenue by major product and service types.

Significant judgments in revenue recognition

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Payment terms and conditions vary by contract type although standard billing terms are that payment is due upon receipt of invoice, payable within 30 to 60 days.

In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that contracts generally do not include a significant financing component if the period between when the payment is received and when the Company transfers the promised goods or services to the customer will be one year or less.

In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that contracts generally do not include a significant financing component if the

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

period between when the payment is received and when the Company transfers the promised goods or services to the customer will be one year or less.

The Company uses the liability method of income tax allocation to account for income taxes.

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The first step is to evaluate whether an income tax position has met the recognition threshold by determining if the weight of available evidence indicates that it is more likely than not to be sustained upon examination.

The second step is to measure the

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

income tax position that has met the recognition threshold as the largest amount that is more than 50 % likely of being realized upon settlement.

The second step is to measure the income tax position that has met the recognition threshold as the largest amount that is more than 50 % likely of being realized upon settlement.

The Company continually assesses the likelihood and amount of potential adjustments and adjusts the income tax provisions, income taxes payable and deferred income taxes in the period in which the facts that give rise to a revision become known.

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RSUs may be either time-based (“TBRSUs”) or time- and performance-based (“PBRSUs”).

The number of common shares authorized for awards under the Equity Plan is 45,875,000 common shares.

The number of common

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

shares authorized for awards under the Equity Plan is 45,875,000 common shares.

Any shares that are subject to options granted under the Equity Plan are counted against this limit as 0.625 shares for every one option granted, any shares that are subject to TBRSUs granted under the Equity Plan are counted against this limit as one share for every TBRSU, and any shares that are subject to PBRSUs granted under the Equity Plan are counted against this limit at the maximum performance attainment (which is generally 1.5 shares for every PBRSU).

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There are approximately 19 million shares in the equity pool available for future grants under the Equity Plan as at February 28, 2022.

In connection with the Cylance (as defined in Note 5) acquisition in fiscal 2019, the Company adopted the BlackBerry-Cylance Stock Plan (the “Cylance Stock Plan”).

The Cylance Stock Plan provides for the grant of Replacement Awards (as defined in Note 8(b)) in connection with unvested Cylance employee equity awards.

In connection with the Cylance Inc.

(“Cylance”) acquisition in fiscal 2019, the Company adopted the BlackBerry-Cylance Stock Plan (the “Cylance Stock Plan”).

The Cylance Stock Plan provides for the grant of replacement awards in connection with unvested Cylance employee equity awards, all of which were canceled upon the closing of the transaction.

The number of common shares authorized for awards under the Cylance Stock Plan is 9,144,176 common shares, which is equal to the amount of replacement awards granted.

As at February 28, 2019, there were no shares remaining in the Cylance Stock Plan for

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

future grants.

As at February 28, 2019, there were no shares remaining in the Cylance Stock Plan for future grants.

In addition, no shares may be reissued under the Cylance Stock Plan in respect of shares that expire, are forfeited, or are settled in cash.

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These costs are included in selling, marketing and administration expenses.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Government subsidies

2 unchanged sentences

Accounting Standards Adopted During Fiscal 2022

ASC 350, Goodwill and Other

In January 2017, the Financial Accounting Standards Board (“FASB”) released ASU 2017-04 on the topic of Intangibles— Goodwill and Other (ASC 350).

ASU 2017-04 simplifies the subsequent measurement of goodwill, eliminating Step 2 from the goodwill impairment test.

Previously, under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) after performing a required procedure to determine the fair value of assets acquired and liabilities assumed in a business combination.

Instead, under the amendments of ASU 2017-04, an entity performs its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying value.

The Company will recognize an impairment charge for any amount by which the carrying value exceeds the reporting unit’s fair value.

The amendments in

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

this update were effective for an entity’s annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

The Company adopted this standard on March 1, 2020.

ASC 326, Credit Losses

In June 2016, the FASB released ASU 2016-13 on the topic of Financial Instruments — Credit Losses (ASC 326).

ASU 2016-13 replaces the previous incurred loss impairment methodology in U.S.

GAAP with a methodology that reflects expected credit losses, requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates, and requires entities to estimate an expected lifetime credit loss on its financial assets.

The guidance also amends the impairment model for available-for-sale debt securities, requiring entities to determine whether all or a portion of the unrealized loss on such securities is a credit loss, and also eliminating the option for management to consider the length of time a security has been in an unrealized loss position as a factor in concluding whether or not a credit loss exists.

The amended model states that an entity recognizes an allowance for credit losses on available-for-sale debt securities, instead of a direct reduction of the amortized cost basis of the investment, as required under previous guidance.

As a result, entities recognize improvements to estimated credit losses on available-for-sale debt securities immediately in earnings as opposed to in interest income over time.

The guidance was effective for interim and annual periods beginning after December 15, 2019.

The Company adopted this guidance in the first quarter of fiscal 2021 using the modified retrospective method.

As a result of the adoption of the new standard on credit losses, the Company recorded a cumulative adjustment to the consolidated balance sheet increasing the allowance for credit losses and increasing deficit by approximately $ 4 million as at March 1, 2020.

As a result, the allowance for credit losses was $ 13 million in the consolidated balance sheet as at March 1, 2020.

Accounting Pronouncements Issued But Not Yet Adopted

In August 2020, the FASB issued a new accounting standard on the topic of debt with conversion and other options, ASU 2020-06.

The amendment in this update simplifies the accounting for convertible instruments by reducing the number of accounting models available for convertible debt instruments and convertible preferred stock.

This update also amends the guidance for the derivatives scope exception for contracts in an entity's own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share.

The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments.

The guidance is effective for interim and annual periods beginning after December 15, 2021.

The Company will adopt this guidance in the first quarter of fiscal 2023 and does not expect the adoption to have a material impact on its results of operations, financial position and disclosures.

In December 2019, the FASB released ASU 2019-12 on the topic of simplifying the accounting for income taxes, as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes.

The amendments in this update removes certain exceptions from Topic 740, Income Taxes, including (i) the exception to the incremental approach for intra period tax allocation;

ASC 740, Income Taxes

In December 2019, the Financial Accounting Standards Board (“FASB”) released ASU 2019-12 on the topic of simplifying the accounting for income taxes, as part of its simplification initiative to reduce the cost and complexity in accounting for income taxes.

The amendments in this update remove certain exceptions from Topic 740, Income Taxes, including:

(i) the exception to the incremental approach for intra-period tax allocation;

(ii) the exception to accounting for basis differences when there are ownership changes in foreign investments;

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The update also simplifies U.S.

GAAP in several other areas of Topic 740 such as (i) franchise taxes and other taxes partially based on income;

GAAP in several other areas of Topic 740 such as:

(i) franchise taxes and other taxes partially based on income;

(ii) transactions with a government that result in a step up in the tax basis of goodwill;

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and (iv) enacted changes in tax laws in interim periods.

The guidance is effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted.

The Company will adopt this guidance in the first quarter of fiscal 2022 and the only aspect of ASU 2019-12 that could have a material impact on the Company’s consolidated financial statements is the removal of the exception related to intraperiod tax allocation.

Upon adoption of the new standard, the Company would determine the tax attributable to continuing operations without regard to the tax effect of other items included in other comprehensive income.

FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use in pricing the asset or

The guidance was effective for interim and annual periods beginning after December 15, 2020, with early adoption permitted.

The only aspect of ASU 2019-12 that impacts the Company is the removal of the exception related to intra-period tax allocation.

As a result of its adoption of the new standard, the Company determines the tax attributable to continuing operations without regard to the tax effect of other items included in other comprehensive income.

The Company adopted this guidance in the first quarter of fiscal 2022 and it did not have a material impact on the Company’s results of operations, financial position and disclosures.

Accounting Pronouncements Issued But Not Yet Adopted

In August 2020, the FASB issued a new accounting standard on the topic of debt with conversion and other options, ASU 2020-06.

This update also amends the guidance for the derivatives scope exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions and requires the application of the if-converted method for calculating diluted earnings per share.

The update also requires entities to provide expanded disclosures about the terms and features of convertible instruments, how the instruments have been reported in the entity’s financial statements, and information about events, conditions, and circumstances that can affect how to assess the amount or timing of an entity’s future cash flows related to those instruments.

The guidance is effective for interim and annual periods beginning after December 15, 2021.

The Company will adopt this guidance in the first quarter of fiscal 2023 and does not expect the adoption to have a material impact on its results of operations, financial position and disclosures as the fair value option accounting model used by the Company is not impacted by this ASU and the Company already utilizes the if-converted method in its calculation of diluted earnings per share relating to the Debentures (as defined in Note 6).

In October 2021, the FASB issued a new accounting standard on the topic of business combinations, accounting for contract assets and contract liabilities from contracts with customers, ASU 2021-08.

The amendment in this update improves the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency.

This update requires entities to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers.

The guidance is effective for interim and annual periods beginning after December 15, 2022 and requires entities to prospectively apply business combinations occurring on or after the effective date of the amendments.

The Company will early adopt this guidance in the first quarter of fiscal 2023, and apply it prospectively to any business acquisitions subsequent to the date of adoption.

Should the Company complete business acquisitions subsequent to adoption, the impact in future periods compared to current accounting standards will depend on any contract assets and contract liabilities acquired.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

liability, such as inherent risk, non-performance risk and credit risk.

In November 2021, the FASB issued a new accounting standard on the topic of government assistance, ASU 2021-10.

The standard requires additional disclosures for transactions with a government accounted for by applying a grant or contribution accounting model by analogy, including:

(i) information about the nature of the transactions and related accounting policy used to account for the transactions;

(ii) the line items on the balance sheet and income statement affected by these transactions including amounts applicable to each line;

and (iii) significant terms and conditions of the transactions, including commitments and contingencies.

The update also requires entities that omit any of the information because it is legally prohibited from being disclosed to include a statement to that effect.

The guidance is effective for annual periods beginning after December 15, 2021.

The Company will adopt this guidance in the first quarter of fiscal 2023 and does not expect the adoption to have a material impact on its disclosures.

FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS

The Company defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The Company applies the following fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value into three levels:

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The independent third-party valuator considers the information provided by the Company before determining whether a change in their original pricing is warranted.

The Company’s investments largely consist of securities issued by major corporate and banking organizations, the provincial and federal governments of Canada, international government banking organizations and the United States Department of the Treasury and are all investment grade.

The Company also holds a limited amount of equity securities following the initial public offering by the issuer of a previous private equity investment.

The Company no longer has Level 3 assets as of February 29, 2020.

The Company’s Level 3 assets previously consisted of auction rate securities.

The Company realized $ 3 million in gains on auction rate securities for the year ended February 29, 2020 (February 28, 2019 - nil ).

The Company’s investments largely consist of debt securities issued by major corporate and banking organizations, the provincial and federal governments of Canada, international government banking organizations and the United States Department of the Treasury and are all investment grade.

The Company also holds certain public equity securities obtained through an initial public offering of a previously held non-marketable equity investment.

The Company recognizes transfers in and out of levels within the fair value hierarchy at the end of the reporting period in which the actual event or change in circumstance occurred.

There were no significant transfers in or out of Level 3 assets during the years ended February 28, 2022 or February 28, 2021.

The Company realized nil in gains on previously held auction rate securities classified as Level 3 assets for the years ended February 28, 2022 and February 28, 2021 (February 29, 2020 - $ 3 million).

For a description of how the fair values of the Debentures (as defined in Note 6) were determined, see the “Convertible debentures” accounting policies in Note 1.

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For a description of how the fair value of the CEO Contingent Cash Award (as defined in Note 7) was determined, see the “2019 Executive Chair Incentive Grant” section of Note 7(b).

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Non-Recurring Fair Value Measurements

Upon the occurrence of certain events, the Company re-measures the fair value of long-lived assets, including property, plant and equipment, operating lease ROU assets, intangible assets and goodwill.

Upon the occurrence of certain events, the Company re-measures the fair value of non-marketable equity investments for which it utilizes the measurement alternative, and long-lived assets, including property, plant and equipment, operating lease ROU assets, intangible assets and goodwill if an impairment or observable price adjustment is recognized in the current period.

Non-Marketable Equity Investments Measured Using the Measurement Alternative

Non-marketable equity investments measured using the measurement alternative include investments in privately held companies without readily determinable fair values in which the Company does not own a controlling interest or have significant influence.

The estimation of fair value used in the fair value measurements required the use of significant unobservable inputs, and as a result, the fair value measurements were classified as Level 3.

Goodwill Impairment

During the year ended February 28, 2022, there were no goodwill impairment charges.

In its annual goodwill impairment test in the fourth quarter of fiscal 2022, the Company’s estimates indicated the fair values of all its reporting units substantially exceeded their carrying values, such carrying values were expected to be recovered, and there was no goodwill impairment.

In the fourth quarter of fiscal 2022, the Company announced that it has agreed to the sale of a significant amount of patent assets to Catapult IP Innovations, Inc.

(“Catapult”) subject to the satisfaction of closing conditions.

The completion of the sale would accelerate the timing of estimated cash flows for the Intellectual Property reporting unit and, based upon changes in the estimates to future cash flows following the sale, could potentially result in impacts that would be material to the consolidated financial statements in relation to the fair value of the goodwill of that reporting unit.

During the year ended February 28, 2021, as a result of the deterioration in economic conditions caused by the global COVID-19 pandemic and its impact on the Company’s reporting units, and the decline of the trading value of the Company’s capital stock below the Company’s consolidated carrying value, the Company determined that it was more likely than not that the fair value of at least one of its reporting units was lower than its carrying value after including goodwill.

As a result, the Company completed an analysis of the fair value of its reporting units to compare against their respective carrying values as of May 31, 2020.

In its analysis, the Company utilized multiple valuation techniques, including the income approach using a discounted future cash flow model, the market-based approach, and the asset value approach which is based on the sum of the values of each of the assets and liabilities within the entity.

In addition to market data, the valuation techniques utilized Level 3 inputs such as the Company’s internal forecasts of its future results, cash flows and its weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested and based upon the Company’s estimated credit rating.

The analysis involves significant judgment in the selection of assumptions necessary to arrive at

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

the reporting units’ fair values, especially in light of the ongoing COVID-19 pandemic and its short-term and potential long-term impacts to the Company’s business.

The total of the fair values of the Company’s reporting units was reconciled to the Company’s market capitalization based on the quoted market price of the Company’s stock in an active market, adjusted by an appropriate control premium.

Where the carrying value of a reporting unit exceeded its fair value, goodwill of the reporting unit was considered to be impaired.

Based on the results of the goodwill impairment test, it was concluded that the carrying value of one reporting unit exceeded its fair value, necessitating an impairment charge for the amount of excess and reducing the carrying value of goodwill.

Consequently, the Company recorded total non-cash goodwill impairment charges of $ 594 million in the first quarter of fiscal 2021, relating to its BlackBerry Spark reporting unit (the “Goodwill Impairment Charge”).

Consequently, the Company recorded total non-cash goodwill impairment charges of $ 594 million in the BlackBerry Spark reporting unit.

The estimated fair values of the Company’s other reporting units substantially exceeded their carrying values at May 31, 2020.

No additional goodwill impairment was identified during the Company’s annual impairment test and the Company’s reporting units all substantially exceeded their carrying values as of the annual test date of December 31, 2020.

During the year ended February 29, 2020, the Company recorded a goodwill impairment charge of $ 22 million relating to its BBM Consumer reporting unit.

During the year ended February 28, 2019, there was no goodwill impairment charge.

Impairment of Long-Lived Assets

During the year ended February 28, 2021, the Company decided to exit and seek subleases for certain leased facilities and made a change in the estimate of future sublease activity of a previously exited facility.

In addition, during the fourth quarter of fiscal 2021, the Company made a strategic decision to move towards a significant work from home model and will vacate or consolidate numerous facilities globally.

The Company will also actively market certain facilities for sublease as part of its strategic decision.

During the year ended February 28, 2021, the Company recorded a non-cash, pre-tax and after-tax impairment charge of $ 46 million consisting of $ 37 million related to operating lease ROU assets for those facilities and $ 9 million related to property, plant and equipment associated with those facilities.

The impairment was determined by comparing the fair value of the impacted ROU asset to the carrying value of the asset as of the impairment measurement date, as required under ASC Topic 360, Property, Plant, and Equipment, using Level 2 inputs.

The fair value of the ROU asset was based on the estimated sublease income for certain facilities taking into consideration the time period it will take to obtain a sublessor, the applicable discount rate and the sublease rate.

The Company also recorded a decrease to its lease liabilities of $ 3 million associated with certain leased facilities with an early termination option, which has been included as a partial offset in impairment of long-lived assets on the Company’s consolidated statements of operations.

The Company conducts an evaluation of the related liabilities and expenses and revises its assumptions and estimates as appropriate as new or updated information becomes available.

During the year ended February 29, 2020, the Company recorded a non-cash, pre-tax and after-tax impairment charge of $ 10 million consisting of $ 8 million related to operating lease ROU assets for certain facilities that have been exited (see Note 12) and $ 2 million related to property, plant and equipment associated with those facilities.

Impairment of Long-Lived Assets (“LLA”)

During the year ended February 28, 2022, there were no LLA impairment charges.

During the year ended February 28, 2021, the Company recorded a non-cash, pre-tax and after-tax impairment charge of $ 46 million consisting of $ 37 million related to operating lease ROU assets for certain facilities and $ 9 million related to property, plant and equipment associated with those facilities.

In addition, the Company also recorded a decrease to its lease liabilities of $ 3 million associated with certain leased facilities with an early termination option, which has been included as a partial offset in impairment of long-lived assets on the Company’s consolidated statements of operations.

The Company conducts an evaluation of the related liabilities and expenses and revises its assumptions and estimates as appropriate as new or updated information becomes available.

During the year ended February 29, 2020, the Company recorded a non-cash, pre-tax and after-tax impairment charge of $ 10 million consisting of $ 8 million related to operating lease ROU assets for certain facilities that have been exited and $ 2 million related to property, plant and equipment associated with those facilities.

BlackBerry Limited

3 unchanged sentences

The components of cash, cash equivalents and investments by fair value level as at February 28, 2022 were as follows:

Cost Basis Unrealized

Cost Basis (1)

Gains Unrealized

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Investments Long-term

Investments Restricted Cash Equivalents Restricted Short-term Investments

Investments Restricted Cash Equivalents

Bank balances $ 105 $ — $ — $ 105 $ 104 $ — $ — $ 1

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Term deposits, certificates of deposits, and GIC's 157 — — 157 65 65 — 27

Bearer deposit notes 40 — — 40 — 40 — — —

Bankers’ acceptances/bearer deposit notes 58 — — 58 58 — — —

Commercial paper 247 — — 247 62 185 — —

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treasury bills/notes 43 — — 43 43 — — —

Corporate notes/bonds 25 — — 25 — 25 — — —

634 — — 634 274 333 — 27

Other investments 17 5 — 22 — — 22 —

$ 774 $ 5 $ ( 9 ) $ 770 $ 378 $ 334 $ 30 $ 28

______________________________

(1) Cost basis for other investments includes the effect of returns of capital.

BlackBerry Limited

3 unchanged sentences

Cost Basis Unrealized

Gains Unrealized

Losses Fair Value Cash and

1 unchanged sentence

Investments Long-term

Investments Restricted Cash Equivalents

Investments Restricted Cash Equivalents Restricted Short-term Investments

Bank balances $ 165 $ — $ 165 $ 165 $ — $ — $ — $ —

3 unchanged sentences

Term deposits, certificates of deposits, and GICs 138 — 138 7 103 — 4 24

Bankers’ acceptances/bearer deposit notes 84 — — 84 30 54 — —

Bearer deposit notes 40 — 40 — 40 — — —

Commercial paper 162 — 162 15 147 — — —

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treasury bills/notes 25 — 25 — 25 — — —

treasury bills/notes 45 — — 45 45 — — —

Corporate notes/bonds 25 — 25 — 25 — —

599 — 599 49 522 — 4 24

$ 811 $ ( 7 ) $ 804 $ 214 $ 525 $ 37 $ 4 $ 24

As at February 28, 2021, the Company had private equity investments without readily determinable fair value of $ 37 million (February 29, 2020 - $ 32 million).

During the year ended February 28, 2021, there was no impairment recognized relating to private equity investments without readily determinable fair value (February 29, 2020 - $ 3 million and February 28, 2019 - nil ).

As at February 28, 2022, the Company had non-marketable equity investments without readily determinable fair value of $ 30 million (February 28, 2021 - $ 37 million).

During the fiscal year ended February 28, 2022, the Company recorded an upward adjustment to the carrying value of certain non-marketable equity investments without readily determinable fair value of $ 5 million resulting from observable price changes in orderly transactions for identical or similar securities which have been included in investment income (loss), net on the Company’s consolidated statements of operations.

The Company also received a distribution from a non-marketable equity investment without readily determinable fair value in the amount of $ 35 million, which for accounting purposes, consisted of a return of capital of $ 13 million and a realized gain of $ 22 million included in investment income (loss), net on the Company’s consolidated statements of operations.

During the year ended February 28, 2022, there was no impairment recognized relating to non-marketable equity investments without readily determinable fair value (February 28, 2021 - nil and February 29, 2020 - $ 3 million).

There were no realized gains or losses on available-for-sale securities for the year ended February 28, 2022 (February 28, 2021 and February 29, 2020 - nil ).

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These letters of credit support certain leasing arrangements entered into in the ordinary course of business.

The letters of credit are for terms ranging from one month to five years.

The letters of credit are for terms ranging from one month to four years.

The Company is legally restricted from accessing these funds during the term of the leases for which the letters of credit have been issued;

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$ 644 $ 635 $ 609 $ 602

As at February 28, 2021, the Company had investments with continuous unrealized losses totaling $ 7 million, consisting of unrealized losses on equity securities (February 29, 2020 - continuous unrealized losses totaling $ 8 million).

As at February 28, 2022 and February 28, 2021, the Company had no available-for-sale debt securities with continuous unrealized losses.

CONSOLIDATED BALANCE SHEET DETAILS

Accounts Receivable, Net

Accounts Receivable, Net of Allowance

The allowance for credit losses as at February 28, 2022 was $ 4 million (February 28, 2021 - $ 10 million).

The Company recognizes current estimated credit losses for accounts receivable, net of allowance.

The CECL for accounts receivable, net are estimated based on days past due and region for each customer in relation to a representative pool of assets consisting of a large number of customers with similar risk characteristics that operate under similar economic environments.

The Company recognizes current estimated credit losses (“CECL”) for accounts receivable.

The CECL for accounts receivable are estimated based on days past due and region for each customer in relation to a representative pool of assets consisting of a large number of customers with similar risk characteristics that operate under similar economic environments.

The Company determined the CECL by estimating historical credit loss experience based on the past due status and region of the customers, adjusted as appropriate to reflect current conditions and estimates of future economic conditions, inclusive of the effect of the COVID-19 pandemic on credit losses.

The duration and severity of the COVID-19 pandemic and the resulting market volatility are highly uncertain and, as such, the impact on expected credit losses is subject to significant judgment and may cause variability in the Company’s allowance for credit losses in future periods.

When specific customers are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately.

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The exposure of default is represented by the assets’ amortized carrying amount at the reporting date.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The following table sets forth the activity in the Company’s allowance for credit losses:

3 unchanged sentences

Impact of adopting ASC 326 4

Prior period recovery for expected credit losses ( 3 )

Ending balance of the allowance for credit loss as at February 28, 2021 10

Current period recovery for expected credit losses ( 2 )

Write-offs charged against the allowance $ ( 4 )

Ending balance of the allowance for credit loss as at February 28, 2022 $ 4

The allowance for credit losses as at February 28, 2021 consists of $ 3 million relating to CECL estimated based on days past due and geographic region and $ 7 million relating to specific customers that were evaluated separately.

The allowance for credit losses as at February 28, 2022 consists of $ 2 million (February 28, 2021 - $ 3 million) relating to CECL estimated based on days past due and region and $ 2 million (February 28, 2021 - $ 7 million) relating to specific customers that were evaluated separately.

There was no customer that comprised more than 10% of accounts receivable as at February 28, 2022 (February 28, 2021 - one customer comprised more than 10%).

Other Receivables

As at February 28, 2022 and February 28, 2021, other receivables included items such as receivables from Hardest-Hit Business Recovery Program (“HHBRP”) and intellectual property licensing receivable, among other items, none of which were greater than 5% of the current assets balance in any of the periods presented.

Other Current Assets

Other current assets comprised the following:

February 28, 2022 February 28, 2021

Intellectual property $ 118 $ —

On January 29, 2022, the Company entered into a patent sale agreement with Catapult, pursuant to which the Company has agreed to sell substantially all of its non-core patent assets to Catapult for total transaction price of $ 600 million.

Patents that are essential to the Company’s current core business operations are excluded from the transaction.

The Company will receive a license back to the patents being sold, which relate primarily to mobile devices, messaging and wireless networking.

Completion of the revenue transaction is subject to the satisfaction of closing conditions.

For the year ended February 28, 2022, the Company reclassified $ 118 million of intellectual property that will be sold under this revenue arrangement as other current assets on the Company’s consolidated balance sheets relating to the patent sale agreement.

Other current assets also included items such as the current portion of deferred commissions and prepaid expenses, among other items, none of which were greater than 5% of the current assets balance in any of the periods presented.

BlackBerry Limited

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In millions of United States dollars, except share and per share data, and except as otherwise indicated

There was one customer that comprised more than 10% of accounts receivable as at February 28, 2021 (February 29, 2020 - two customers comprised more than 10%).

Other Current Assets

As at February 28, 2021 and February 29, 2020, other current assets include items such as the current portion of deferred commissions and prepaid expenses, among other items, none of which were greater than 5 % of the current assets balance in all years presented.

Property, Plant and Equipment, Net

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February 28, 2022 February 28, 2021

Buildings, leasehold improvements and other $ 67 $ 72

BlackBerry operations and other information technology $ 92 $ 110

Manufacturing, repair and research and development equipment 72 73

Leasehold improvements and other 53 67

Furniture and fixtures 10 10

Manufacturing, repair and research and development equipment 1 72

Accumulated amortization 115 211

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Acquired technology $ 1,023 $ 776 $ 247

Intellectual property 498 299 199

Other acquired intangibles 494 283 211

Intellectual property 117 53 64

$ 1,634 $ 1,112 $ 522

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Acquired technology $ 1,023 $ 712 $ 311

Intellectual property 489 275 214

Other acquired intangibles 494 233 261

Intellectual property 498 299 199

$ 2,015 $ 1,244 $ 771

3 unchanged sentences

During fiscal 2022, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Based on the carrying value of the identified intangible assets as at February 28, 2022, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for each of the succeeding years is expected to be as follows:

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and fiscal 2027 - $ 79 million.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The weighted average remaining useful lives of the intangible assets are as follows:

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Acquired technology 5.1 years 5.9 years

Intellectual property 6.4 years 6.6 years

Other acquired intangibles 5.7 years 6.4 years

Intellectual property 7.5 years 6.4 years

Changes to the carrying amount of goodwill during the fiscal years ended February 28, 2022, February 28, 2021 and February 29, 2020 were as follows:

1 unchanged sentence

Carrying amount as at February 28, 2019 $ 1,463

Measurement period adjustment (1)

Goodwill impairment charge (note 3) ( 22 )

Effect of foreign exchange on non-U.S.

dollar denominated goodwill ( 2 )

Goodwill acquired through business combination completed during the year 899

Carrying amount as at February 29, 2020 1,437

Measurement period adjustment (note 5) ( 2 )

Goodwill impairment charge ( 22 )

Goodwill impairment charge (note 3) ( 594 )

Effect of foreign exchange on non-U.S.

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dollar denominated goodwill ( 5 )

Goodwill impairment charge (note 3) ( 594 )

Carrying amount as at February 28, 2022 $ 844

______________________________

(1) The Company recorded a measurement period adjustment of $ 2 million in selling, general and administration expenses during the fiscal year ended February 29, 2020 related to the Cylance acquisition, as the amount would have been recognized in the prior fiscal year, if the adjustment to the provisional amounts had been recognized as of the acquisition date on February 21, 2019.

Other Long-term Assets

As at February 28, 2021 and February 29, 2020, other long-term assets include long-term portion of deferred commission and long-term receivables, among other items, none of which were greater than 5 % of total assets in any of the periods presented.

As at February 28, 2022 and February 28, 2021, other long-term assets included long-term portion of deferred commission and long-term receivables, among other items, none of which were greater than 5% of total assets in any of the periods presented.

Accrued Liabilities

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February 28, 2022 February 28, 2021

Variable incentive accrual $ 16 $ 33

Accrued royalties $ 20 $ 20

Operating lease liabilities, current (note 11)

Other 109 125

Other accrued liabilities include accrued vendor liabilities, accrued carrier liabilities and payroll withholding taxes, among other items, none of which were greater than 5 % of the current liabilities balance.

Other accrued liabilities include variable incentive accrual, accrued director fees, accrued vendor liabilities, accrued carrier liabilities and payroll withholding taxes, among other items, none of which were greater than 5% of the current liabilities balance in any of the periods presented.

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Other Long-term Liabilities

Other long-term liabilities consist of the long-term portion of finance lease liabilities and non-lease component liabilities related to the Company’s previous Resource Allocation Program entered into in order to transition the Company from a legacy hardware manufacturer to a licensing driven software business.

BUSINESS ACQUISITIONS

There were no business acquisitions during fiscal 2021 and fiscal 2020.

On February 21, 2019, the Company acquired all of the issued and outstanding shares of Cylance Inc.

(“Cylance”), an artificial intelligence and cybersecurity leader, for approximately $ 1.4 billion in cash and common shares, plus the assumption of unvested employee incentive awards.

The acquisition of Cylance was a strategic addition to the Company’s end-to-end secure communications portfolio.

The accounting for the acquisition of Cylance was completed in the second quarter of fiscal 2020, as the calculation of working capital of Cylance was finalized.

In lieu of cash, a proportion of consideration owed to certain Cylance shareholders will be paid in BlackBerry shares issued from treasury in equal instalments on the first three anniversary dates of the acquisition (the “Exchange Shares”).

There are no service or other requirements associated with the issuance of these shares.

One installment of the Exchange Shares was issued in each of fiscal 2021 and fiscal 2020.

The Company incurred $ 12 million in acquisition-related costs included in selling, general and administration expenses for the fiscal year ended February 28, 2019.

The Company recorded a measurement period recovery of $ 2 million in selling, general and administration expenses during the fiscal year ended February 29, 2020, as the amount would have been recognized in the prior fiscal year, if the adjustment to the provisional amounts had been recognized as of the acquisition date.

The difference between the amount of the provision for (recovery of) income taxes and the amount computed by multiplying income (loss) before income taxes by the statutory Canadian tax rate is reconciled as follows:

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Minimum taxes 207 206

Convertible Debentures (note 7) 94 1

Debentures (note 6)

Research and development 379 390

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Unrecognized income tax benefits, ending balance $ 20 $ 24 $ 72

As at February 28, 2021, $ 22 million of the unrecognized tax benefits have been netted against deferred income taxes and $ 2 million has been recorded within income taxes payable on the Company’s consolidated balance sheets.

As at February 28, 2022, $ 20 million of the unrecognized tax benefits have been netted against deferred income taxes and nil has been recorded within income taxes payable on the Company’s consolidated balance sheets.

A summary of open tax years by major jurisdiction is presented below:

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As at February 28, 2022, the Company has the following net operating loss carryforwards and tax credits, which are scheduled to expire in the following years:

Year of Expiry Net Operating Losses Capital Losses Research and Development Tax Credits (1)

Year of Expiry Net Operating Losses Research and Development Tax Credits (1)

Minimum Taxes

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2038 199 17 —

2035 92 — 52 4

2036 275 — 39 —

2037 475 — 23 —

2038 225 — 17 —

2039 13 — 16 —

2040 — — 14 —

Indefinite 321 21 —

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1.75% Convertible Debentures

On September 1, 2020, Hamblin Watsa Investment Counsel Ltd., in its capacity as investment manager of Fairfax Financial Holdings Limited ("Fairfax") and another institutional investor invested in the Company through a $ 365 million private placement of new debentures (the “1.75% Debentures”), which partially replaced $ 605 million of debentures issued in a private placement on September 7, 2016 (the “3.75% Debentures”) as described below (collectively, the “Debentures”).

On September 1, 2020, Hamblin Watsa Investment Counsel Ltd., in its capacity as investment manager of Fairfax Financial Holdings Limited (“Fairfax”), and another institutional investor invested in the Company through a $ 365 million private placement of new debentures (the “1.75% Debentures”), which replaced $ 605 million of debentures issued in a private placement on September 7, 2016 (the “3.75% Debentures”) as described below (collectively, the “Debentures”).

Interest on the 1.75% Debentures is payable quarterly in arrears at a rate of 1.75 % per annum.

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Additionally, the 1.75% Debentures cannot be converted to the extent that, after giving effect to the conversion, the holder would beneficially own or exercise control or direction over more than 19.99 % of the Company’s then issued and outstanding shares (the “Blocker Provision”).

Due to the conversion option and other embedded derivatives within the 1.75% Debentures, and consistent with the Company’s accounting for the 3.75% Debentures, the Company has elected to record the 1.75% Debentures, including the debt itself and all embedded derivatives, at fair value and present the 1.75% Debentures as a single hybrid financial instrument.

No portion of the fair value of the 1.75% Debentures has been recorded as equity, nor would be if the embedded derivatives were bifurcated from the host debt contract.

BlackBerry Limited

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In millions of United States dollars, except share and per share data, and except as otherwise indicated

No portion of the fair value of the 1.75% Debentures has been recorded as equity, nor would be if the embedded derivatives were bifurcated from the host debt contract.

Each period, the fair value of the 1.75% Debentures is recalculated and resulting gains and losses from the change in fair value of the Debentures associated with non-credit components are recognized in income, while the change in fair value associated with credit components is recognized in AOCL.

The fair value of the Debentures has been determined using the significant Level 2 inputs of interest rate curves and any observable trades of the Debentures that may have occurred during the period, the market price and volatility of the Company’s listed common shares, and the significant Level 3 inputs related to credit spread and the implied discount of the 1.75% Debentures at issuance.

The Company determined its credit spread by calibrating to observable trades of the 3.75% Debentures and trending the calibrated spread to valuation dates utilizing an appropriate credit index.

The fair value of the Debentures has been determined using the significant Level 2 inputs interest rate curves and any observable trades of the Debentures that may have occurred during the period, the market price and volatility of the Company’s listed common shares, and the significant Level 3 inputs related to credit spread and the implied discount of the 1.75% Debentures at issuance.

The Company originally determined its credit spread by calibrating to observable trades of the 3.75% Debentures and trending the calibrated spread to valuation dates utilizing an appropriate credit index.

The Company’s credit spread was determined to be 7.90 % as of the issuance date of the 1.75% Debentures and 6.58 % as of February 28, 2022.

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The Company determined the implied discount on the 1.75% Debentures by calculating the fair value of the 1.75% Debentures on September 1, 2020 utilizing the above credit spread and other inputs described above.

The following table summarizes the changes in fair value of the 1.75% Debentures for the fiscal year ended February 28, 2021:

The following table summarizes the change in fair value of the 1.75% Debentures for the fiscal year ended February 28, 2022, which also represents the total changes through earnings of items classified as Level 3 in the fair value hierarchy:

February 28, 2022

2 unchanged sentences

Balance as at February 28, 2021 720

Change in fair value of the Debentures ( 213 )

Balance as at February 28, 2022 $ 507

The difference between the fair value of the 1.75% Debentures and the unpaid principal balance of $ 365 million is $ 142 million.

2 unchanged sentences

February 28, 2022 February 28, 2021 February 29, 2020

Charge associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ ( 347 ) $ — $ —

Charge associated with the change in fair value from instrument-specific credit components recorded in AOCL ( 8 ) — —

Total increase in the fair value of the 1.75% Debentures $ ( 355 ) $ — $ —

Income (charge) associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ 212 $ ( 347 ) $ —

Income (charge) associated with the change in fair value from instrument-specific credit components recorded in AOCL 1 ( 8 ) —

Total decrease (increase) in the fair value of the 1.75% Debentures $ 213 $ ( 355 ) $ —

For the year ended February 28, 2022, the Company recorded interest expense related to the Debentures of $ 6 million, which has been included in investment income (loss), net on the Company’s consolidated statements of operations (fiscal 2021 - $ 15 million;

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GAAP due to its beneficial ownership of common shares in the Company after taking into account potential conversion of the Debentures, owned $ 500 million principal amount of the 3.75% Debentures and purchased $ 330 million principal amount of the 1.75% Debentures.

As such, the redemption of Fairfax’s portion of the 3.75% Debentures, the investment by Fairfax in the 1.75% Debentures and the payment of interest on the Debentures represent related party transactions.

As such, the redemption of Fairfax’s portion of the 3.75% Debentures, the investment by Fairfax in the 1.75% Debentures and the payment of interest on the Debentures to Fairfax represent related party transactions.

Fairfax receives interest at the same rate as other holders of the Debentures.

3.75% Convertible Debentures

On September 7, 2016, Fairfax and other institutional investors invested in the Company through a $ 605 million private placement of the 3.75% Debentures.

The terms of the 3.75% Debentures were substantially similar to those of the 1.75% Debentures, except that the 3.75 % Debentures had a higher interest rate, were convertible into common shares at a price of $ 10.00 per common share, were subject to a lower approval threshold for extraordinary resolutions, did not contain the Blocker Provision and had a maturity date of November 13, 2020 .

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

3.75% Convertible Debentures

On September 7, 2016, Fairfax and other institutional investors invested in the Company through a $ 605 million private placement of the 3.75% Debentures.

On July 22, 2020, the Company announced that, with the required approval of the holders of the 3.75% Debentures, it would redeem the 3.75% Debentures for a redemption amount of approximately $ 615 million (the “Redemption Amount”), which would settle all outstanding obligations of the Company in respect of the 3.75% Debentures.

The redemption was completed on September 1, 2020 .

As the Redemption Amount represented fair value at August 31, 2020 and the Company elected the fair value option for the 3.75% Debentures, the impact of the redemption on the fair value was recorded in the second quarter of fiscal 2021.

As the Redemption Amount represented fair value at August 31, 2020 and the Company elected the fair value option for the 3.75% Debentures, the impact to the consolidated statements of operations of the redemption on the fair value was recorded in the second quarter of fiscal 2021.

A portion of the fair value associated with changes in instrument-specific credit components in the amount of $ 6 million remained in OCI until redemption on September 1, 2020 at which point $ 6 million was discharged to the consolidated statement of operations and is included in the table below.

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Stock-based compensation — 63

Exchange shares issued from Cylance acquisition (note 5) — 35

Value of pre-combination service related to Replacement Awards included in purchase consideration — 21

Common shares issued related to Exchange Shares 1,380 —

Common shares issued for employee share purchase plan 911 6

3 unchanged sentences

Stock-based compensation — 44

Common shares issued related to Exchange Shares (note 5) 1,380 —

Common shares issued related to Exchange Shares 1,380 —

Common shares issued for employee share purchase plan 1,524 7

3 unchanged sentences

Stock-based compensation — 36

Common shares issued related to Exchange Shares (note 5) 1,380 —

Common shares issued related to Exchange Shares 1,422 —

Common shares issued for employee share purchase plan 735 7

Common shares outstanding as at February 28, 2022 576,228 $ 2,869

Common shares (the “Exchange Shares”) were issued in connection with the Cylance acquisition, which was completed on February 21, 2019.

In lieu of cash, a portion of the consideration owed to certain Cylance shareholders was paid in equal installments of Exchange Shares on the first three anniversary dates of the closing.

The Company had 576 million voting common shares outstanding, 1 million options to purchase voting common shares, 15 million RSUs and 2 million DSUs outstanding as at March 29, 2022.

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(b) Stock-based Compensation

Replacement awards

In connection with the Cylance acquisition in fiscal 2019, the Company granted 8,320,130 options and 824,046 RSUs (“Replacement Awards”) to replace unvested Cylance employee stock options and unvested restricted share units, all of which were canceled upon the closing of the transaction.

The Company was obligated to replace the unvested Cylance employee equity awards under the merger agreement governing the acquisition.

In accordance with ASC Topic 805, Business Combinations , as the Company was obligated to conduct the replacement, these awards are considered to be replacement awards.

Exchanges of share options or other share-based payment awards in conjunction with a business combination are modifications of share-based payment awards in accordance with ASC Topic 718, Compensation - Stock Compensation (“ASC 718”).

As a result, a portion of the fair-value-based measure of the Replacement Awards is included in measuring the consideration transferred in the Cylance business combination.

To determine the portion of the Replacement Awards that is consideration transferred, the Company measured the value of both the Replacement Awards granted by the Company and the historical Cylance awards as of February 21, 2019 in accordance with ASC 718.

The portion of the fair-value-based measure of the Replacement Awards that was part of the consideration transferred equaled the portion of the replaced Cylance award that was attributable to pre-combination service.

The Company attributed a portion of the Replacement Awards to post-combination service as these awards require post-combination service.

The fair value of the rollover consideration was estimated to be $ 39 million, net of forfeitures, of which $ 21 million was attributable to pre-acquisition services.

The remaining fair value of $ 18 million is

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

recorded as stock-based compensation over the remaining vesting period subsequent to the acquisition date.

As of February 28, 2021, the remaining amount of unrecognized expense for the replacement awards totaled $ 3 million (February 29, 2020 - $ 6 million).

Stock options

4 unchanged sentences

The Company issues new shares to satisfy stock option exercises.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

A summary of option activity for fiscal 2022 is shown below:

4 unchanged sentences

Balance as at February 28, 2021 1,583 $ 4.92

Granted during the year — —

Exercised during the year ( 555 ) 4.60

14 unchanged sentences

Balance as at February 28, 2022 59 $ 4.26

As at February 28, 2021, there was $ 2 million of unrecognized stock-based compensation expense related to unvested stock options that will be expensed over the vesting period, which, on a weighted average basis, results in a period of approximately 1.28 years.

As at February 28, 2022, there was a nominal amount of unrecognized stock-based compensation expense related to unvested stock options that will be expensed over the vesting period, which was approximately 0.27 years on a weighted average basis.

The total fair value of stock options vested during the year ended February 28, 2022 amounted to $ 1 million (February 28, 2021 - $ 6 million;

4 unchanged sentences

February 29, 2020 - tax deficiency of nil ).

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

During the year ended February 28, 2022, there were no stock options granted (February 28, 2021 - nil ;

February 28, 2019 - 8,320,130 ).

The weighted average fair value of these grants was calculated using the BSM option pricing model with the following assumptions:

February 28, 2021 February 29, 2020 February 28, 2019

Weighted average grant date fair value of stock options granted during the period $ — $ — $3.97 to $7.48

Risk-free interest rates — % — % 2.50% to 2.56%

Expected life in years 0 0 3.91 to 6.16

Expected dividend yield — % — % — %

Volatility — % — % 37% to 40%

The Company has no current expectation of paying cash dividends on its common shares.

The risk-free interest rates utilized during the life of the stock options are based on a U.S.

Treasury security for an equivalent period.

The Company estimates the volatility of its common shares at the date of grant based on a combination of the implied volatility of publicly traded options on its common shares and historical volatility, as the Company believes that this is a reasonable indicator of expected volatility going forward.

The expected life of stock options granted under the Equity Plan is based on historical exercise patterns, which the Company believes are representative of future exercise patterns.

The expected life of stock options granted under the Cylance Stock Plan is based on the simplified method, as the terms and conditions are different than those previously granted under the Equity Plan.

February 29, 2020 - nil ).

Restricted share units

1 unchanged sentence

February 29, 2020 - $ 57 million).

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

A summary of RSU activity during fiscal 2022 is shown below:

13 unchanged sentences

As at February 28, 2022, there was $ 73 million of unrecognized compensation expense related to RSUs that will be expensed over the vesting period, which, on a weighted average basis, results in a period of approximately 1.62 years.

During the year ended February 28, 2021, there were 8,620,551 RSUs granted (February 29, 2020 - 16,902,445 , of which 4,182,189 were inducement awards in connection with the Cylance acquisition), all of which will be settled upon vesting by the issuance of new common shares.

During the year ended February 28, 2022, there were 6,195,827 RSUs granted (February 28, 2021 - 8,620,551 ), all of which will be settled upon vesting by the issuance of new common shares.

During the year ended February 28, 2022, the weighted average fair value for RSUs granted was $ 9.72 (February 28, 2021 - $ 5.54 ;

2 unchanged sentences

February 29, 2020 - $ 33 million).

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Inducement awards

3 unchanged sentences

As at February 28, 2022, there were 666,432 common shares subject to Inducement Awards outstanding.

The Company recorded compensation expense with respect to the Inducement Awards of approximately $ 1 million for the year ended February 28, 2021 (February 29, 2020 - $ 3 million).

The Company recorded a recovery to compensation expense with respect to the Inducement Awards of approximately $ 1 million for the year ended February 28, 2022 (February 28, 2021 - expense of $ 1 million;

February 29, 2020 - expense of $ 3 million).

2019 Executive Chair Incentive Grant

1 unchanged sentence

The expense associated with the time-based equity award and market performance-based equity award is included in the compensation expense noted above.

The equity and liability components of the agreement are summarized below:

Time-based equity award

The time-based equity award consists of 5 million time-based RSUs that will vest annually in five equal tranches beginning on November 3, 2019 .

Market performance-based equity award

The market performance-based equity award consists of five tranches, each of 1 million market-condition RSUs that will become earned and vested in increments of 1 million RSUs when the 10 -day volume weighted average closing price of the Company’s common shares on the New York Stock Exchange reaches $ 16 , $ 17 , $ 18 , $ 19 and $ 20 , respectively.

The grant date fair value and the derived service period for each of the market condition equity awards were determined through the use of a Monte Carlo simulation model utilizing Level 2 inputs.

Should the target price of an award be reached prior to the derived service date, the remaining unrecognized compensation cost for the award will be accelerated and recorded at that time.

Any market-condition RSUs that have not been earned before November 3, 2023 will terminate on such date.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Contingent cash award

The contingent cash award consists of a cash amount of $ 90 million that becomes payable should the 10 -day volume weighted average closing price of the Company’s common shares on the New York Stock Exchange reach $ 30 (“CEO Contingent Cash Award”).

As the award is triggered by the Company’s share price, it is considered stock-based compensation and accounted for as a share-based liability award, the fair value of which is determined at each reporting period end utilizing a option pricing model using Level 2 inputs and the associated compensation expense for the reporting period recorded.

As the award is triggered by the Company’s share price, it is considered stock-based compensation and accounted for as a share-based liability award, the fair value of which is determined at each reporting period end utilizing an option pricing model using Level 2 inputs and the associated compensation expense for the reporting period recorded.

If unearned, the contingent cash award will terminate on November 3, 2023 .

The Company recorded compensation expense with respect to the contingent cash award of approximately $ 8 million for the year ended February 28, 2021 (February 29, 2020 - $ 1 million;

February 28, 2019 - $ 1 million).

The Company recorded a recovery to compensation expense with respect to the contingent cash award of approximately $ 6 million for the year ended February 28, 2022 (February 28, 2021 - expense of $ 8 million;

February 29, 2020 - expense of $ 1 million).

The liability recorded in respect to the award was $ 2 million as at February 28, 2022 and is included within accrued liabilities (February 28, 2021 - $ 8 million).

3 unchanged sentences

The Company had a liability of $ 11 million in relation to the DSU Plan as at February 28, 2022 (February 28, 2021 - $ 14 million) included in accrued liabilities.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

EARNINGS (LOSS) PER SHARE

2 unchanged sentences

February 28, 2022 February 28, 2021 February 29, 2020

Net income (loss) for basic and diluted earnings (loss) per share available to common shareholders $ ( 1,104 ) $ ( 152 ) $ 93

Net income (loss) for basic earnings (loss) per share available to common shareholders $ 12 $ ( 1,104 ) $ ( 152 )

Debentures fair value adjustment (1) (2)

1 unchanged sentence

interest expense on Debentures (1) (2)

Net income (loss) for diluted earnings (loss) per share available to common shareholders $ ( 1,104 ) $ ( 195 ) $ —

Net loss for diluted loss per share available to common shareholders $ ( 194 ) $ ( 1,104 ) $ ( 195 )

Weighted average number of shares outstanding (000’s) - basic (3)(4)

1 unchanged sentence

Effect of dilutive securities (000’s)

Stock-based compensation (4) (5)

Conversion of Debentures (1) (2)

60,833 — 60,500

Exchange shares from Cylance acquisition (6)

Weighted average number of shares and assumed conversions (000’s) diluted 631,440 561,305 614,361

3 unchanged sentences

______________________________

(1) The Company has not presented the dilutive effect of the Debentures using the if-converted method in the calculation of diluted earnings (loss) per share for the year ended February 28, 2021, as to do so would be antidilutive.

(1) The Company has not presented the dilutive effect of the Debentures using the if-converted method in the calculation of diluted loss per share for the year ended February 28, 2021, as to do so would be antidilutive.

See Note 6 for details on the Debentures.

(2) The Company has presented the dilutive effect of the Debentures using the if-converted method, assuming conversion at the beginning of the fiscal year for the years ended February 28, 2022 and February 29, 2020.

Accordingly, to calculate diluted earnings (loss) per share, the Company adjusted net income (loss) by eliminating the fair value adjustment made to the Debentures and interest expense incurred on the Debentures in the years ended February 29, 2020 and February 28, 2019, and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

Accordingly, to calculate diluted loss per share, the Company adjusted net income (loss) by eliminating the fair value adjustment made to the Debentures and interest expense incurred on the Debentures in the years ended February 28, 2022 and February 29, 2020, and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

See Note 6 for details on the Debentures.

(3) The year ended February 28, 2021, includes approximately 1,421,945 common shares (Exchange Shares) remaining to be issued on the third anniversary date of the Cylance acquisition, in consideration for the acquisition.

The year ended February 29, 2020, includes approximately 2,802,067 common shares to be issued in equal installments on the two anniversary dates of the Cylance acquisition thereafter, in consideration for the acquisition.

There are no service or other requirements associated with the issuance of these shares.

(4) The Company has not presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of diluted earnings (loss) per share for the years ended February 28, 2021 and February 29, 2020, as to do so would be antidilutive.

(5) The Company has presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of diluted earnings (loss) per share for the years ended February 28, 2019.

As at February 28, 2019, there were 8,985,836 options and 9,300,191 RSUs outstanding that were in-the-money and may have a dilutive effect on earnings (loss) per share in future periods.

(6) The Company has presented the dilutive effect of the Exchange Shares in connection with the Cylance acquisition completed on February 21, 2019 in the calculation of diluted earnings (loss) per share for the year ended February 28, 2019.

The remaining Exchange Shares are included in the calculation of weighted average number of shares outstanding for the years ended February 28, 2021 and February 29, 2020 as noted in footnote 3 above.

(3) The year ended February 28, 2021, included approximately 1,421,945 Exchange Shares remaining to be issued on the third anniversary date of the Cylance acquisition.

The year ended February 29, 2020, included approximately 2,802,067 Exchange Shares to be issued in equal installments on the two anniversary dates of the Cylance acquisition thereafter.

There were no service or other requirements associated with the issuance of these shares.

(4) The Company has not presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of diluted loss per share for the years ended February 28, 2022, February 28, 2021 and February 29, 2020 as to do so would be antidilutive.

BlackBerry Limited

6 unchanged sentences

Balance, beginning of period $ — $ — $ 2

Other comprehensive income (loss) before reclassification — ( 2 ) 1

Cumulative impact of adoption of ASU 2016-01 — — 8

Other comprehensive loss before reclassification — — ( 2 )

Accumulated net unrealized gains on available-for-sale debt securities $ — $ — $ —

3 unchanged sentences

Amounts reclassified from AOCL into net income (loss) ( 1 ) — —

Accumulated net unrealizes gains (losses) on derivative instruments designated as cash flow hedges $ 1 $ ( 1 ) $ —

Accumulated net unrealized gains (losses) on derivative instruments designated as cash flow hedges $ — $ 1 $ ( 1 )

Foreign Currency Cumulative Translation Adjustment

Balance, beginning of period $ ( 4 ) $ ( 9 ) $ ( 7 )

Other comprehensive income (loss) before reclassification 5 ( 2 ) ( 6 )

Other comprehensive income (loss) ( 6 ) 5 ( 2 )

Foreign currency cumulative translation adjustment $ ( 10 ) $ ( 4 ) $ ( 9 )

3 unchanged sentences

Amounts reclassified from AOCL into net income (loss) — 6 —

Cumulative impact of adoption of ASU 2016-01 — — ( 14 )

Change in fair value from instruments-specific credit risk on Debentures $ ( 8 ) $ ( 9 ) $ ( 22 )

2 unchanged sentences

Accumulated Other Comprehensive Loss, End of Period $ ( 19 ) $ ( 13 ) $ ( 33 )

As a result of the adoption of ASU 2016-01 in fiscal 2019, the Company reclassified $ 8 million in unrecognized losses on equity securities that had previously been recorded to other comprehensive income (loss), through a cumulative addition to deficit in the consolidated balance sheet as of March 1, 2018.

The Company recognized approximately $ 14 million on the change in fair value from instrument-specific credit risk associated with the 3.75% Debentures that had previously been recorded to deficit through a cumulative increase to accumulated other comprehensive loss in the consolidated balance sheet as of March 1, 2018.

During the year ended February 28, 2021, nil gains or losses (pre-tax and post-tax) associated with cash flow hedges were reclassified from AOCL into selling, marketing and administration expenses (February 29, 2020 - nil gains or losses).

During the year ended February 28, 2022, $ 1 million in gains (pre-tax and post-tax) associated with cash flow hedges were reclassified from AOCL into selling, marketing and administration expenses (February 28, 2021 - nil gains or losses).

COMMITMENTS AND CONTINGENCIES

1 unchanged sentence

The Company has $ 27 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business as of February 28, 2022.

See the discussion of restricted cash and restricted short-term investments in Note 3.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

See the discussion of restricted cash in Note 3.

(b) Contingencies

1 unchanged sentence

The Company is subject to a variety of claims (including claims related to patent infringement, purported class actions and other claims in the normal course of business) and may be subject to additional claims either directly or through indemnities against claims that it provides to certain of its partners and customers.

In particular, the industry in which the Company competes has many participants that own, or claim to own, intellectual property, including participants that have been issued patents and may have filed patent applications or may obtain additional patents and proprietary rights for technologies similar to those used by the Company in its products.

In particular, the industry in which the Company competes has many participants that own, or claim to own, intellectual property, including participants that have

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

been issued patents and may have filed patent applications or may obtain additional patents and proprietary rights for technologies similar to those used by the Company in its products.

The Company has received, and may receive in the future, assertions and claims from third parties that the Company’s products infringe on their patents or other intellectual property rights.

14 unchanged sentences

discovery has not been started or is incomplete;

the facts that are in dispute are highly complex (e.g., once a patent is identified, the analysis of the patent and a comparison to the activities of the Company is a labour-intensive and highly technical process);

the facts that are in dispute are highly complex;

the difficulty of assessing novel claims;

16 unchanged sentences

The Court denied the motion to dismiss the Second Amended Complaint on March 19, 2018.

On January 4, 2019, the Court issued an order placing the case on its suspense calendar but allowed fact and expert discovery to continue.

On August 2, 2019, the Magistrate Judge issued a Report and Recommendation that the Court grant the defendants’ motion for judgment on the pleadings dismissing the claims of additional plaintiffs Cho and Ulug.

On September 24, 2019, the District Court Judge accepted the Magistrate Judge’s recommendation and dismissed the claims of Cho and Ulug against all defendants.

On October 17, 2019, Cho and

On October 17, 2019, Cho and Ulug filed a Notice of Appeal.

Plaintiffs filed a motion for class certification on June 8, 2020.

On January 26, 2021, the District Court granted the plaintiffs’ motion for class certification.

The class includes “all persons who purchased or otherwise acquired the common stock of BlackBerry Limited on the NASDAQ during the period from March 28, 2013, through and including September 20, 2013.” The class excludes (a) all persons and entities who purchased or otherwise acquired the Company’s common stock between March 28, 2013, and April 10, 2013, and who sold all their the Company common stock before April 11, 2013, and (b) the Defendants, officers and directors of the Company, members of their immediate families and their legal representatives, heirs, successors, or assigns, and any entity in which any of the Defendants have or had a controlling interest.

On February 9, 2021, the defendants filed a Rule 23(f) petition for interlocutory review of the class certification order with the Second Circuit Court of Appeals.

The Second Circuit Court of Appeals denied the Rule 23(f) petition on June 23, 2021.

The Second Circuit Court of Appeals affirmed the District Court judgment

BlackBerry Limited

1 unchanged sentence

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Ulug filed a Notice of Appeal.

The Second Circuit Court of Appeals affirmed the District Court judgment dismissing Cho and Ulug’s claims on March 11, 2021.

The District Court removed the case from its suspense calendar on May 29, 2020.

Plaintiffs filed a motion for class certification on June 8, 2020, the defendants filed oppositions on August 10, 2020, and the plaintiffs filed a reply on September 28, 2020.

All discovery was completed as of November 13, 2020.

On January 26, 2021, the District Court granted the plaintiffs’ motion for class certification.

On February 9, 2021, the defendants filed a Rule 23(f) petition for interlocutory review of the class certification order with the Second Circuit Court of Appeals.

The plaintiffs filed an opposition to the Rule 23(f) petition on February 19, 2021, and the defendants filed a motion for leave to file a reply in support of the petition on February 26, 2021.

On February 8, 2021, the Magistrate Judge set a settlement conference for May 19, 2021.

On February 15, 2021, the District Court set the following briefing schedule for dispositive motions:

motions due April 19, 2021, oppositions due June 18, 2021, and replies due July 19, 2021.

dismissing Cho and Ulug’s claims on March 11, 2021, and denied Cho and Ulug’s petition for panel rehearing and rehearing en banc on April 28, 2021.

On April 19, 2021, Defendants filed a motion for summary judgment, and both parties filed Daubert motions to exclude the testimony of the oppositions’ marketing and accounting experts.

On May 5, 2021, the parties participated in a mediation with the Hon.

Layn Phillips (ret.), which did not result in an agreement.

On August 13, 2021, Plaintiffs filed an unopposed motion for approval of a class notice plan.

On September 10, 2021, the Court (i) granted in part and denied in part the parties’ Daubert motions and (ii) granted Plaintiffs’ unopposed motion for approval of the class notice plan.

Postcard notice was mailed on October 8, 2021;

publication notice was issued starting on October 18, 2021.

On January 3, 2022, the Court granted Defendants’ motion for summary judgment with respect to seven statements, and otherwise denied Defendants’ motion.

Trial is scheduled to begin on April 7, 2022.

On July 23, 2014, the plaintiffs in the putative Ontario class action filed a motion for certification and leave to pursue statutory misrepresentation claims.

17 unchanged sentences

Other contingencies

As at February 28, 2021, the Company has received $ 15 million (February 29, 2020 - $ 10 million) in funds from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX.

As at February 28, 2022, the Company has recognized $ 17 million (February 28, 2021 - $ 15 million) in funds from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund (“SIF”) program’s investment in BlackBerry QNX.

A portion of this amount may be repayable in the future under certain circumstances if certain terms and conditions are not met by the Company, which is not probable at this time.

Panasonic settlement agreement

In fiscal 2019, the Company and Panasonic Corporation entered into a settlement agreement whereby the Company received approximately $ 12 million in connection with previously purchased components utilized by the legacy handheld devices business.

This amount, net of legal costs of approximately $ 3 million, was recorded within settlements, net on the consolidated statements of operations in the fourth quarter of fiscal 2019.

(d) Concentrations in Certain Areas of the Company’s Business

The Company attempts to ensure that most components essential to the Company’s business are generally available from multiple sources;

3 unchanged sentences

Therefore, the Company remains subject to risks of supply shortages.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

(e) Indemnifications

(d) Indemnifications

The Company enters into certain agreements that contain indemnification provisions under which the Company could be subject to costs and damages, including in the event of an infringement claim against the Company or an indemnified third party.

1 unchanged sentence

To date, the Company has not encountered material costs as a result of such indemnifications.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The Company has entered into indemnification agreements with its current and former directors and executive officers.

7 unchanged sentences

For the Years Ended

February 28, 2021 February 29, 2020

February 28, 2022 February 28, 2021 February 29, 2020

Operating lease cost, included in selling, marketing and administration $ 23 $ 30 $ 33

1 unchanged sentence

Amortization of ROU assets, included in amortization $ — $ 1 $ 2

Interest on lease liabilities, included in investment income, net — —

Total finance lease cost $ — $ 1 $ 2

1 unchanged sentence

For the Years Ended

February 28, 2021 February 29, 2020

February 28, 2022 February 28, 2021 February 29, 2020

Cash paid for amounts included in the measurement of lease liabilities:

1 unchanged sentence

Cash used in financing activities related to finance lease payments — 1 2

During the year ended February 28, 2021, the Company entered into $ 4 million in lease obligations and recognized a corresponding ROU asset of $ 4 million.

During the year ended February 28, 2021, the Company incurred losses of $ 37 million on LLA impairment of ROU assets, as described in Note 3.

The Company also had sublease income of $ 1 million and incurred $ 2 million in short-term lease costs during the year ended February 28, 2021.

During the year ended February 29, 2020, the Company entered into $ 1 million in lease obligations and recognized a corresponding ROU asset of $ 1 million.

During the year ended February 29, 2020, the Company incurred losses of $ 8 million on LLA impairment of ROU assets, as described in Note 3.

The Company also had sublease income of $ 2 million and incurred $ 2 million in short-term lease costs during the year ended February 29, 2020.

During the year ended February 28, 2022, the Company entered into $ 6 million (February 28, 2021 - $ 4 million) in lease obligations and recognized a corresponding ROU asset of $ 6 million (February 28, 2021 - $ 4 million).

During the year ended February 28, 2022, the Company incurred losses of nil (February 28, 2021 - $ 37 million;

February 29, 2020 - $ 8 million) on LLA impairment of ROU assets, as described in Note 3.

The Company also had sublease income during the year ended February 28, 2022 of $ 3 million (February 28, 2021 - $ 1 million;

February 29, 2020 - $ 2 million) and incurred short-term lease costs of $ 2 million (February 28, 2021 - $ 2 million;

February 29, 2020 - $ 2 million).

BlackBerry Limited

15 unchanged sentences

Total finance lease assets $ — $ —

Finance lease liabilities

Accrued liabilities $ — $ 1

Other long-term liabilities — —

Total finance lease liabilities $ — $ 1

February 28, 2022 February 28, 2021

1 unchanged sentence

Operating leases 4.3 years 4.7 years

Finance leases 0.9 years 1.3 years

Weighted average discount rate

Operating lease 3.4 % 3.4 %

Finance leases 2.5 % 2.2 %

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Maturities of undiscounted lease liabilities were as follows:

February 28, 2022

Operating Leases Finance Leases

Operating Leases

Fiscal year 2023 $ 31

3 unchanged sentences

Fiscal year 2027 9

Thereafter 16 —

Total future minimum lease payments 101

Imputed interest ( 7 )

Total $ 123 $ —

REVENUE AND SEGMENT DISCLOSURES

The Company reports segment information based on the “management” approach.

The management approach designates the internal reporting used by the CODM for making decisions and assessing performance as a source of the Company’s reportable operating segments.

In the first quarter of fiscal 2022, the CODM, who is the Executive Chair and CEO of the Company, began making decisions and assessing the performance of the Company using three operating segments,

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

whereas the CODM previously made decisions and assessed the performance of the Company as a single operating segment.

The CODM does not evaluate operating segments using discrete asset information.

The Company does not specifically allocate assets to operating segments for internal reporting purposes.

Segment Disclosures

The Company is now organized and managed as three operating segments:

Cybersecurity, IoT, and Licensing and Other.

Prior year information has been restated to conform to the current year presentation of the Company’s segment information.

The Company disaggregates revenue from contracts with customers based on geographical regions, timing of revenue recognition, and the major product and service types as described in Note 1.

The following table shows information by operating segment for the fiscal year ended February 28, 2022:

Cybersecurity IoT Licensing and Other Segment Totals

Segment revenue $ 477 $ 178 $ 63 $ 718

Segment cost of sales 194 30 23 247

Segment gross margin (1)

$ 283 $ 148 $ 40 $ 471

______________________________

(1) A reconciliation of total segment gross margin to consolidated totals is set forth below.

The following table shows information by operating segment for the fiscal year ended February 28, 2021 and February 29, 2020:

For the Year Ended

February 28, 2021 February 29, 2020

Cybersecurity IoT Licensing and Other Segment Totals Cybersecurity IoT Licensing and Other Segment Totals

Segment revenue $ 491 $ 130 $ 272 $ 893 $ 475 $ 216 $ 349 $ 1,040

Segment cost of sales 192 23 30 245 185 29 53 267

Segment gross margin (1)

$ 299 $ 107 $ 242 $ 648 $ 290 $ 187 $ 296 $ 773

______________________________

(1) A reconciliation of total segment gross margin to consolidated totals is set forth below.

Cybersecurity consists of the Company’s BlackBerry Spark software platform, BlackBerry AtHoc, BlackBerry Alert and BlackBerry SecuSUITE.

The BlackBerry Spark platform is a comprehensive offering of security software products and services, including the BlackBerry Cyber Suite and the BlackBerry Spark Unified Endpoint Management Suite, which are also marketed together as the BlackBerry Spark Suite, offering the Company’s broadest range of tailored cybersecurity and endpoint management options.

The BlackBerry Cyber Suite includes revenue from the Company’s Cylance artificial intelligence and machine learning-based platform consisting of BlackBerry Protect, BlackBerry Optics, BlackBerry Persona, BlackBerry Gateway, BlackBerry Guard managed services and other cybersecurity applications.

The BlackBerry Spark UEM Suite includes the Company’s BlackBerry UEM, BlackBerry Dynamics, and BlackBerry Workspaces solutions.

Cybersecurity revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

IoT consists of BlackBerry QNX, BlackBerry Certicom, BlackBerry Radar, BlackBerry IVY and other IoT applications.

IoT revenue is generated predominantly through software licenses, commonly bundled with support, maintenance and professional services.

Licensing and Other consists of the Company’s intellectual property arrangements and settlement awards.

Other consists of the Company’s legacy service access fees (“SAF”) business.

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

The following table reconciles total segment gross margin for the fiscal year ended February 28, 2022, February 28, 2021 and February 29, 2020 to the Company’s consolidated totals:

For the Years Ended

February 28, 2022 February 28, 2021 February 29, 2020

Total segment gross margin 471 $ 648 $ 773

Adjustments (1) :

Stock compensation 4 5 5

Restructuring charges — — 5

Research & development 219 215 259

Selling, marketing and administration 297 344 493

Amortization 165 182 194

Impairment of long-lived assets — 43 10

Impairment of goodwill — 594 22

Debentures fair value adjustment ( 212 ) 372 ( 66 )

Investment income (loss), net ( 21 ) 6 ( 1 )

Consolidated income (loss) before income taxes $ 19 $ ( 1,113 ) $ ( 148 )

______________________________

(1) The CODM reviews segment information on an adjusted basis, which excludes certain amounts as described below:

Stock compensation expenses - Equity compensation is a non-cash expense and does not impact the ongoing operating decisions taken by the Company’s management.

Restructuring charges - The Company believes that restructuring costs relating to employee termination benefits and facilities pursuant to the Resource Allocation Program (“RAP”) entered into in order to transition the Company from a legacy hardware manufacturer to a licensing driven software business do not reflect expected future operating expenses, are not indicative of the Company’s core operating performance, and may not be meaningful in comparison to the Company’s past operating performance.

The Company disaggregates revenue from contracts with customers based on geographical regions, timing of revenue recognition, and the major product and service types, as discussed above in “Segment Disclosures”.

The Company’s revenue, classified by major geographic region in which the Company’s customers are located, was as follows:

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( 1) North America includes all revenue from the Company’s intellectual property arrangements, due to the global applicability of the patent portfolio and licensing arrangements thereof.

Total revenue, classified by product and service type (see Note 1), was as follows:

For the Years Ended

February 28, 2021 February 29, 2020 February 28, 2019

Software and Services $ 621 $ 691 $ 559

Licensing and Other 272 349 345

Total $ 893 $ 1,040 $ 904

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Revenue, classified by timing of recognition, was as follows:

4 unchanged sentences

Total $ 718 $ 893 $ 1,040

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Revenue contract balances

4 unchanged sentences

Decrease due to payment, fulfillment of performance obligations, or other ( 752 ) ( 647 ) ( 24 )

Increase (decrease), net ( 79 ) ( 79 ) ( 7 )

Decrease, net ( 50 ) ( 50 ) ( 5 )

Closing balance as at February 28, 2022 $ 138 $ 244 $ 16

6 unchanged sentences

Revenue recognized for performance obligations satisfied in prior periods

For the fiscal year ended February 28, 2021, $ 2 million in revenue was recognized relating to performance obligations satisfied in a prior period (fiscal year ended February 29, 2020 - $ 1 million, in revenue recognized relating to performance obligations satisfied in a prior period;

fiscal year ended February 28, 2019 - $ 11 million in revenue recognized relating to the legacy handheld devices business).

Segment Disclosures

The Company reports segment information based on the “management” approach.

The management approach designates the internal reporting used by the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as a source of the Company’s reportable operating segments.

The CODM, who is the Executive Chair and CEO, reviews financial information, makes decisions and assesses the performance of the Company as a single operating segment.

Property, plant and equipment, intangible assets, operating lease ROU assets and goodwill, classified by geographic segments in which the Company’s assets are located, were as follows:

For the fiscal year ended February 28, 2022, $ 1 million in revenue was recognized relating to performance obligations satisfied in a prior period (fiscal year ended February 28, 2021 - $ 2 million;

fiscal year ended February 29, 2020 - $ 1 million).

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Property, plant and equipment, intangible assets, operating lease ROU assets and goodwill, classified by geographic region in which the Company’s assets are located, were as follows:

February 28, 2022 February 28, 2021

4 unchanged sentences

$ 1,457 $ 2,567 $ 1,731 $ 2,818

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

Information About Major Customers

There was one customer that comprised 11 % of the Company’s revenue in fiscal 2022 (fiscal 2021 - one customer that comprised 22 %;

fiscal 2019 - one customer that comprised more than 10%).

fiscal 2020 - one customer that comprised 13 %).

CASH FLOW AND ADDITIONAL INFORMATION

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February 29, 2020 - $ 39 million)

Selling, marketing and administration expenses for the fiscal year ended February 28, 2021 included $ 1 million with respect to foreign exchange gain, net of foreign exchange hedging (February 29, 2020 - nil ;

February 28, 2019 - gain of $ 2 million).

Selling, marketing and administration expenses for the fiscal year ended February 28, 2022 included $ 1 million with respect to foreign exchange gain, net of foreign exchange hedging (February 28, 2021 - $ 1 million;

February 29, 2020 - nil ).

Foreign exchange

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Consequently, the Company is exposed to interest rate risk as a result of holding investments of varying maturities.

The fair value of investments, as well as the investment income derived from the investment portfolio, will fluctuate with changes in prevailing interest rates.

The Company has also issued the Debentures as described in Note 7.

The fair value of investments, as well as the investment income derived from the investment portfolio, will fluctuate with changes in

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

prevailing interest rates.

The Company has also issued Debentures with a fixed interest rate as described in Note 6.

The fair value of the 1.75% Debentures will fluctuate with changes in prevailing interest rates.

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As at February 28, 2022, no single issuer represented more than 10 % of the total cash, cash equivalents and investments (February 28, 2021 - no single issuer represented more than 13 % of the total cash, cash equivalents and investments), representing cash balances at one of the Company’s banking counterparties.

The Company maintains Credit Support Annexes (“CSAs”) with several of its counterparties.

These CSAs require the outstanding net position of all contracts be made whole by the paying or receiving of collateral to or from the

BlackBerry Limited

Notes to the Consolidated Financial Statements

In millions of United States dollars, except share and per share data, and except as otherwise indicated

counterparties on a daily basis, subject to exposure and transfer thresholds.

As at February 28, 2021, the Company had nil collateral posted or held with counterparties (February 29, 2020 - $ 1 million in collateral posted).

Liquidity risk

Cash, cash equivalents, and investments were approximately $ 770 million as at February 28, 2022.

The Company’s management remains focused on maintaining appropriate cash balances, efficiently managing working capital balances and managing the liquidity needs of the business.

The Company’s management remains focused on efficiently managing working capital balances and managing the liquidity needs of the business.

Based on its current financial projections, the Company believes its financial resources, together with expected future operating cash generating and operating expense reduction activities and access to other potential financing arrangements, should be sufficient to meet funding requirements for current financial commitments and future operating expenditures not yet committed, and should provide the necessary financial capacity for the foreseeable future.

Government subsidies

During the first quarter of fiscal 2021, the Government of Canada announced the Canada Emergency Wage Subsidy (“CEWS”) for Canadian employers whose businesses were affected by the COVID-19 pandemic, initially running for a thirty-six week period between March and November 2020.

The program was subsequently extended to December 2020 and the Government of Canada has announced plans for an additional extension to June 2021.

The CEWS originally provided a subsidy of up to 75 % of eligible employees’ employment insurable remuneration, subject to certain criteria, which declined to up to 65 % for a period of time before returning to 75 %.

Accordingly, the Company applied for the CEWS to the extent it met the requirements to receive the subsidy and during the year ended February 28, 2021, recorded $ 53 million in government subsidies as a reduction to operating expenses in the consolidated statement of operations.

During fiscal 2021, the Government of Canada announced the Canada Emergency Wage Subsidy (“CEWS”) and the Canada Emergency Rent Subsidy (“CERS”) for Canadian employers whose businesses were affected by the COVID-19 pandemic.

The CEWS program initially ran for a thirty-six week period between March and November 2020 and the CERS program for a period between September 2020 and July 2021.

These programs were subsequently extended to October 2021.

The CEWS program provided a subsidy of up to 75 % of eligible employees’ employment insurable remuneration, subject to certain criteria.

The extension also included a gradual decrease to the subsidy rate.

CEWS received after June 5, 2021 may be repayable in the future under certain circumstances if certain terms and conditions are not met by the Company, which is not probable at this time.

The CERS program provided a subsidy of up to 65 % of eligible fixed property expenses.

The base subsidy was determined based on the percentage revenue decline experienced by businesses affected by the COVID-19 pandemic.

The CERS program gradually reduced the amount and availability of subsidies in the months leading up to the program’s final claim period.

During the third quarter of fiscal 2022, the Government of Canada announced the HHBRP to continue supporting businesses affected by the COVID-19 pandemic.

The HHBRP provides a subsidy of up to 50 % of eligible employees’ employment insurable remuneration, subject to certain criteria, and rent.

The Company applied for the CEWS, CERS and HHBRP to the extent it met the requirements to receive the subsidy and during the year ended February 28, 2022, recorded $ 46 million in government subsidies as a reduction to operating expenses in the consolidated statement of operations (February 28, 2021 - $ 53 million).

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

1 unchanged sentence

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data