What changed in this filing

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Item 1. Financial Statements

2022-06-24 compared with 2021-12-22 · 275 added, 367 removed, 472 unchanged (58% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets

November 30, 2021 February 28, 2021

May 31, 2022 February 28, 2022

Cash and cash equivalents (note 2) $ 391 $ 378

1 unchanged sentence

Accounts receivable, net of allowance of $ 4 and $ 4 , respectively (note 3)

Other receivables 17 25

Other receivables (note 3) 21 25

Income taxes receivable 9 9

Other current assets (note 3) 169 159

Restricted cash equivalents and restricted short-term investments (note 3) 29 28

Restricted cash and cash equivalents (note 2) 28 28

Long-term investments (note 2) 30 30

6 unchanged sentences

Accounts payable $ 14 $ 22

Accrued liabilities (note 4) 178 178

Accrued liabilities (note 3 and note 9) 304 157

Income taxes payable (note 4) 13 11

22 unchanged sentences

Consolidated Statements of Shareholders’ Equity

Three Months Ended November 30, 2021

Capital Stock

and Additional

Paid-in Capital Deficit Accumulated

Comprehensive Loss Total

Balance as at August 31, 2021 $ 2,845 $ ( 1,512 ) $ ( 15 ) $ 1,318

Net income — 74 — 74

Other comprehensive loss — — ( 5 ) ( 5 )

Stock-based compensation 8 — — 8

Shares issued:

Employee share purchase plan 4 — — 4

Balance as at November 30, 2021 $ 2,857 $ ( 1,438 ) $ ( 20 ) $ 1,399

Three Months Ended November 30, 2020

Capital Stock

and Additional

Paid-in Capital Deficit Accumulated

Comprehensive Loss Total

Balance as at August 31, 2020 $ 2,788 $ ( 861 ) $ ( 13 ) $ 1,914

Net loss — ( 130 ) — ( 130 )

Other comprehensive income — — 4 4

Stock-based compensation 11 — — 11

Shares issued:

Exercise of stock options 1 — — 1

Employee share purchase plan 3 — — 3

Balance as at November 30, 2020 $ 2,803 $ ( 991 ) $ ( 9 ) $ 1,803

See notes to consolidated financial statements.

BlackBerry Limited

(United States dollars, in millions) (unaudited)

Consolidated Statements of Shareholders’ Equity

Nine Months Ended November 30, 2021

Three Months Ended May 31, 2022

Capital Stock

7 unchanged sentences

Shares issued:

Exercise of stock options (note 7) 2 — — 2

Employee share purchase plan (note 6) 3 — — 3

Balance as at November 30, 2021 $ 2,857 $ ( 1,438 ) $ ( 20 ) $ 1,399

Nine Months Ended November 30, 2020

Balance as at May 31, 2022 $ 2,880 $ ( 1,475 ) $ ( 20 ) $ 1,385

Three Months Ended May 31, 2021

Capital Stock

5 unchanged sentences

Other comprehensive income — — 3 3

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

Stock-based compensation 7 — — 7

2 unchanged sentences

Employee share purchase plan 3 — — 3

Balance as at November 30, 2020 $ 2,803 $ ( 991 ) $ ( 9 ) $ 1,803

Balance as at May 31, 2021 $ 2,834 $ ( 1,368 ) $ ( 10 ) $ 1,456

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Operations

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Three Months Ended

May 31, 2022 May 31, 2021

Revenue (note 10) $ 168 $ 174

5 unchanged sentences

Amortization 27 46

Impairment of goodwill (note 3) — — — 594

Impairment of long-lived assets — — — 21

Debentures fair value adjustment (note 5) ( 46 ) ( 4 )

66 276 491 1,285

Operating income (loss) 51 ( 127 ) ( 148 ) ( 794 )

Investment income (loss), net (note 3 and note 6) 25 ( 1 ) 22 ( 6 )

Income (loss) before income taxes 76 ( 128 ) ( 126 ) ( 800 )

Provision for (recovery of) income taxes (note 5) 2 2 6 ( 11 )

Net income (loss) $ 74 $ ( 130 ) $ ( 132 ) $ ( 789 )

Earnings (loss) per share (note 8)

Litigation settlement (note 9) 165 —

Operating loss ( 177 ) ( 58 )

Investment loss, net ( 1 ) ( 2 )

Loss before income taxes ( 178 ) ( 60 )

Provision for income taxes (note 4) 3 2

Net loss $ ( 181 ) $ ( 62 )

Loss per share (note 7)

Basic $ ( 0.31 ) $ ( 0.11 )

3 unchanged sentences

(United States dollars, in millions) (unaudited)

Consolidated Statements of Comprehensive Income (Loss)

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Net income (loss) $ 74 $ ( 130 ) $ ( 132 ) $ ( 789 )

Consolidated Statements of Comprehensive Loss

Three Months Ended

May 31, 2022 May 31, 2021

Net loss $ ( 181 ) $ ( 62 )

Other comprehensive income (loss)

Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the period, net of income taxes of nil for the three and nine months ended November 30, 2021 and November 30, 2020 (note 9) — — ( 1 ) 3

Foreign currency translation adjustment, net of income taxes of nil for the three and nine months ended November 30, 2021 (net of income taxes of $1 million and nil, respectively, for the three and nine months ended November 30, 2020) ( 4 ) 1 ( 6 ) 5

Net change in fair value from instrument-specific credit risk on the Debentures, net of income taxes of nil for the three and nine months ended November 30, 2021 (net of income taxes of $2 million and nil, respectively, for the three and nine months ended November 30, 2020) (note 6) ( 1 ) 3 — 16

Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the three months ended, net of income taxes of nil (May 31, 2021 - income taxes of nil) (note 8) 1 1

Foreign currency translation adjustment ( 4 ) 1

Net change in fair value from instrument-specific credit risk on the 1.75% Debentures, net of income taxes of nil (May 31, 2021 - income taxes of nil) (note 5) 2 1

Other comprehensive income (loss) ( 1 ) 3

Comprehensive income (loss) $ 69 $ ( 126 ) $ ( 139 ) $ ( 765 )

Comprehensive loss $ ( 182 ) $ ( 59 )

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Cash Flows

Nine Months Ended

November 30, 2021 November 30, 2020

Three Months Ended

May 31, 2022 May 31, 2021

Cash flows from operating activities

Net loss $ ( 181 ) $ ( 62 )

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

Adjustments to reconcile net loss to net cash used in operating activities:

Amortization 29 49

Stock-based compensation 8 7

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

Impairment of goodwill (note 3) — 594

Impairment of long-lived assets — 21

Debentures fair value adjustment (note 5) ( 46 ) ( 4 )

4 unchanged sentences

Other receivables 4 ( 1 )

Income taxes receivable 1 ( 4 )

Other assets ( 9 ) ( 6 )

3 unchanged sentences

Deferred revenue ( 22 ) ( 29 )

Net cash provided by (used in) operating activities ( 37 ) 30

Net cash used in operating activities ( 42 ) ( 33 )

Cash flows from investing activities

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

Distribution from long-term investments 35 —

Acquisition of property, plant and equipment ( 1 ) ( 2 )

6 unchanged sentences

Issuance of common shares 3 4

Payment of finance lease liability — ( 1 )

Repurchase of 3.75% Debentures — ( 610 )

Issuance of 1.75% Debentures — 365

Net cash provided by (used in) financing activities 9 ( 236 )

Net cash provided by financing activities 3 4

Effect of foreign exchange gain (loss) on cash, cash equivalents, restricted cash, and restricted cash equivalents ( 1 ) 3

Net increase (decrease) in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period 82 ( 153 )

Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period 13 150

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period 406 218

10 unchanged sentences

In the opinion of management, all normal recurring adjustments considered necessary for fair presentation have been included in these interim consolidated financial statements.

Operating results for the three and nine months ended November 30, 2021 are not necessarily indicative of the results that may be expected for the full year ending February 28, 2022.

Operating results for the three months ended May 31, 2022 are not necessarily indicative of the results that may be expected for the full year ending February 28, 2023.

The consolidated balance sheet at February 28, 2022 was derived from the audited Annual Financial Statements but does not contain all of the footnote disclosures from the Annual Financial Statements.

The preparation of the consolidated financial statements requires management to make estimates and assumptions with respect to the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities.

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

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

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:

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

Cybersecurity, IoT (collectively, “Software & Services”), and Licensing and Other, as further discussed in Note 10.

Risks and Uncertainties

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.

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 below in Note 3.

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.

Significant Accounting Policies and Critical Accounting Estimates

1 unchanged sentence

Accounting Standards Adopted During Fiscal 2023

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;

and (iii) the exception in interim period income tax accounting for year-to-date losses that exceed anticipated losses.

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;

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

(iii) separate financial statements of entities not subject to tax;

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

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 or disclosures.

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 (unaudited)

ACCOUNTING PRONOUNCEMENTS 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.

ASU 2020-06, Debt with Conversion and Other Options

In August 2020, the Financial Standards Accounting Board (“FASB”) issued a new accounting standard on the topic of debt with conversion and other options, accounting standards update (“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.

2 unchanged sentences

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 accounting model used by the Company was not impacted 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).

The Company adopted this guidance in the first quarter of fiscal 2023 and it did not 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 1.75% Debentures (as defined in Note 5).

ASU 2021-08, Business Combinations

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.

2 unchanged sentences

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 adopt this guidance in the first quarter of fiscal 2024.

The Company is currently evaluating the impact the standard will have on its results of operations, financial position and disclosures, but at this time the Company does not expect the adoption to have a material impact on its results of operations, financial position and disclosures for business combinations completed prior to adoption.

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

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

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 (unaudited)

ASU 2021-10, Government Assistance

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

5 unchanged sentences

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 results of operations, financial position and disclosures.

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

FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS

8 unchanged sentences

The fair value hierarchy also requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair 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 (unaudited)

Recurring Fair Value Measurements

5 unchanged sentences

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 private equity investments without readily determinable fair value, as well as certain public equity securities obtained through an initial public offering of a previously held private equity investment.

For a description of how the fair values of the 1.75% Debentures (as defined in Note 6) and 3.75% Debentures (as defined in Note 6) were determined, see the “Convertible debentures” accounting policies in Note 1 to the Annual Financial Statements.

The 1.75% Debentures are classified as Level 3 and the 3.75% Debentures were classified as Level 2.

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

For a description of how the fair value of the 1.75% Debentures (as defined in Note 5) was determined, see the “Convertible debentures” accounting policies in Note 1 to the Annual Financial Statements.

The 1.75% Debentures are classified as Level 3.

Non-Recurring Fair Value Measurements

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 first quarter of fiscal 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.

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 BlackBerry Spark reporting unit (the “Goodwill Impairment Charge”).

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

The Company did not identify any goodwill impairment during its annual impairment test in the fourth quarter of fiscal 2021, and all reporting units substantially exceeded their carrying values.

For further discussion of the Goodwill Impairment Charge in fiscal 2021, see Note 3 to the Annual Financial Statements.

In its annual goodwill impairment test in the fourth quarter of fiscal 2021, the Company’s estimate of cash flows indicated that such carrying values were expected to be recovered for all reporting units.

Nonetheless, it is reasonably possible that future judgements, assumptions and estimates of cash flows may change resulting in the need to write down those assets to fair value.

Reductions in the Company’s estimates of long-term revenue growth rates could potentially result in impacts that would be material to the consolidated financial statements, including the fair value of the Company’s goodwill, particularly in relation to its BlackBerry Spark reporting unit.

BlackBerry Limited

1 unchanged sentence

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

Non-Marketable Equity Investments Measured Using the Measurement Alternative

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.

Cash, Cash Equivalents and Investments

The components of cash, cash equivalents and investments by fair value level as at November 30, 2021 were as follows:

The components of cash, cash equivalents and investments by fair value level as at May 31, 2022 were as follows:

Cost Basis (1)

3 unchanged sentences

Investments Long-term

Investments Restricted Cash Equivalents

Investments Restricted Cash and Cash Equivalents

Bank balances $ 97 $ — $ — $ 97 $ 95 $ — $ — $ 2

2 unchanged sentences

Equity securities 10 — ( 10 ) — — — — —

Term deposits, certificates of deposits, and GIC's 140 — — 140 53 59 — 28

Bankers’ acceptances/bearer deposit notes 20 — — 20 12 8 — —

Term deposits, certificates of deposits, and GICs 54 — — 54 28 — — 26

Bearer deposit notes 60 — — 60 60 — — —

Commercial paper 257 — — 257 125 132 — —

promissory notes 85 — — 85 33 52 — —

government sponsored enterprise notes 129 — — 129 — 129 — —

treasury bills/notes 50 — — 50 50 — — —

government sponsored enterprise notes 69 — — 69 — 69 — —

Corporate notes/bonds 19 — — 19 — 19 — —

594 — — 594 296 272 — 26

Other investments 17 5 — 22 — — 22 —

$ 726 $ 5 $ ( 10 ) $ 721 $ 391 $ 272 $ 30 $ 28

______________________________

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

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

BlackBerry Limited

2 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

Losses Fair Value Cash and

1 unchanged sentence

Investments Long-term

Investments Restricted Cash Equivalents Restricted Short-term Investments

Investments Restricted Cash and Cash Equivalents

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

3 unchanged sentences

Term deposits, certificates of deposits, and GICs 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 — —

2 unchanged sentences

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

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

During the three and nine months ended November 30, 2021, 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, consisting 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.

There were no realized gains or losses on available-for-sale securities for the three and nine months ended November 30, 2021 (realized losses of nil for the three and nine months ended November 30, 2020).

The Company has restricted cash and cash equivalents and restricted short-term investments, consisting of cash and securities pledged as collateral to major banking partners in support of the Company’s requirements for letters of credit.

______________________________

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

As at May 31, 2022, the Company had private non-marketable equity investments without readily determinable fair value of $ 30 million (February 28, 2022 - $ 30 million).

During the three months ended May 31, 2022 and May 31, 2021, no adjustments were made to the carrying value of non-marketable equity investments without readily determinable fair value as a result of observable price changes or impairment.

As of May 31, 2022, the Company has recorded a cumulative upward adjustment of $ 5 million to the carrying value of certain non-marketable equity investments without readily determinable fair value as a result of observable price changes for identical or similar securities (February 28, 2022 - $ 5 million).

As of May 31, 2022, the Company has recorded a cumulative impairment of $ 3 million to the carrying value of certain other non-marketable equity investments without readily determinable fair value (February 28, 2022 - $ 3 million).

There were no realized gains or losses on available-for-sale securities for the three months ended May 31, 2022 (realized losses of nil for the three months ended May 31, 2021).

The Company has restricted cash and cash equivalents, consisting of cash and securities pledged as collateral to major banking partners in support of the Company’s requirements for letters of credit.

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 four years.

The letters of credit are for terms ranging from one month to three 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;

however, the Company can continue to invest the funds and receive investment income thereon.

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at November 30, 2021 and February 28, 2021 from the consolidated balance sheets to the consolidated statements of cash flows:

November 30, 2021 February 28, 2021

Cash and cash equivalents $ 271 $ 214

Restricted cash and cash equivalents 29 4

Total cash, cash equivalents, restricted cash, and restricted cash equivalents presented in the consolidated statements of cash flows

BlackBerry Limited

1 unchanged sentence

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

The contractual maturities of available-for-sale investments as at November 30, 2021 and February 28, 2021 were as follows:

November 30, 2021 February 28, 2021

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at May 31, 2022 and February 28, 2022 from the consolidated balance sheets to the consolidated statements of cash flows:

May 31, 2022 February 28, 2022

Cash and cash equivalents $ 391 $ 378

Restricted cash and cash equivalents 28 28

Total cash, cash equivalents, restricted cash, and restricted cash equivalents presented in the consolidated statements of cash flows

The contractual maturities of available-for-sale investments as at May 31, 2022 and February 28, 2022 were as follows:

May 31, 2022 February 28, 2022

Cost Basis Fair Value Cost Basis Fair Value

2 unchanged sentences

$ 604 $ 594 $ 644 $ 635

As at November 30, 2021 and February 28, 2021, the Company had no available-for-sale debt securities with continuous unrealized losses .

As at May 31, 2022 and February 28, 2022, the Company had no available-for-sale debt securities with continuous unrealized losses .

CONSOLIDATED BALANCE SHEET DETAILS

Accounts Receivable, Net of Allowance

The allowance for credit losses as at November 30, 2021 was $ 5 million (February 28, 2021 - $ 10 million).

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

The cumulative expected credit losses (“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 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.

The allowance for credit losses as at May 31, 2022 was $ 4 million (February 28, 2022 - $ 4 million).

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.

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.

3 unchanged sentences

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

November 30, 2021

Beginning balance as of February 28, 2021 $ 10

Impact of adopting ASC 326 4

Prior 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

Current period recovery for expected credit losses —

Write-offs charged against the allowance ( 4 )

Ending balance of the allowance for credit loss as at November 30, 2021 $ 5

The allowance for credit losses as at November 30, 2021 consists of $ 2 million (February 28, 2021 - $ 3 million) relating to CECL estimated based on days past due and region and $ 3 million (February 28, 2021 - $ 7 million) relating to specific customers that were evaluated separately.

There was one customer that comprised more than 10% of accounts receivable as at November 30, 2021 (February 28, 2021 - one customer comprised more than 10%).

Ending balance of the allowance for credit loss as at May 31, 2022 $ 4

The allowance for credit losses as at May 31, 2022 consists of $ 1 million (February 28, 2022 - $ 2 million) relating to CECL estimated based on days past due and region and $ 3 million (February 28, 2022 - $ 2 million) relating to specific customers that were evaluated separately.

BlackBerry Limited

1 unchanged sentence

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

There was no customer that comprised more than 10% of accounts receivable as at May 31, 2022 (February 28, 2022 - no customer comprised more than 10%).

Other Receivables

As at May 31, 2022 and February 28, 2022, other receivables included items such as receivables from the Government of Canada’s Hardest-Hit Business Recovery Program (“HHBRP”) and an 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

As at November 30, 2021 and February 28, 2021, other current assets 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.

Other current assets comprised the following:

May 31, 2022 February 28, 2022

Intellectual property $ 118 $ 118

On January 29, 2022, the Company entered into a patent sale agreement with Catapult IP Innovations, Inc.

(“Catapult”), pursuant to which the Company agreed to sell substantially all of its non-core patent assets to Catapult for a total transaction price of $ 600 million.

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

Pursuant to the patent sale agreement, the Company would 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.

Catapult continues to work on securing its required financing;

however, the Company is no longer under exclusivity with Catapult and is exploring alternative options in parallel.

For the year ended February 28, 2022, the Company had classified $ 118 million of intellectual property that would be sold under the patent sale agreement with Catapult as other current assets on the Company’s consolidated balance sheets relating to the patent sale agreement.

As at May 31, 2022, the Company continues to classify the intellectual property as other current assets on the Company’s consolidated balance sheets.

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.

Property, Plant and Equipment, Net

Property, plant and equipment comprised the following:

November 30, 2021 February 28, 2021

Buildings, leasehold improvements and other $ 53 $ 67

May 31, 2022 February 28, 2022

BlackBerry operations and other information technology $ 93 $ 92

Manufacturing, repair and research and development equipment 69 72

Leasehold improvements and other 54 53

Furniture and fixtures 9 10

Manufacturing, repair and research and development equipment 1 1

Accumulated amortization 119 115

Net book value $ 38 $ 41

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 (unaudited)

Intangible Assets, Net

Intangible assets comprised the following:

As at November 30, 2021

As at May 31, 2022

Cost Accumulated

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Acquired technology $ 1,023 $ 789 $ 234

Intellectual property 505 323 182

Other acquired intangibles 494 293 201

Intellectual property 120 50 70

$ 1,637 $ 1,132 $ 505

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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

For the nine months ended November 30, 2021, amortization expense related to intangible assets amounted to $ 130 million (nine months ended November 30, 2020 - $ 133 million).

Total additions to intangible assets for the nine months ended November 30, 2021 amounted to $ 22 million (nine months ended November 30, 2020 - $ 23 million).

During the nine months ended November 30, 2021, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

Based on the carrying value of the identified intangible assets as at November 30, 2021, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2022 and each of the five succeeding years is expected to be as follows:

For the three months ended May 31, 2022, amortization expense related to intangible assets amounted to $ 25 million (three months ended May 31, 2021 - $ 45 million).

Total additions to intangible assets for the three months ended May 31, 2022 amounted to $ 8 million (three months ended May 31, 2021 - $ 6 million).

During the three months ended May 31, 2022, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

Based on the carrying value of the identified intangible assets as at May 31, 2022, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2023 and each of the five succeeding years is expected to be as follows:

fiscal 2023 - $ 74 million;

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fiscal 2027 - $ 79 million and fiscal 2028 - $ 43 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 (unaudited)

Changes to the carrying amount of goodwill during the nine months ended November 30, 2021 were as follows:

Changes to the carrying amount of goodwill during the three months ended May 31, 2022 were as follows:

Carrying Amount

Carrying amount as at February 28, 2021 $ 849

Goodwill impairment charge (see note 3) ( 594 )

Effect of foreign exchange on non-U.S.

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dollar denominated goodwill ( 3 )

Carrying amount as at November 30, 2021 $ 845

Carrying amount as at May 31, 2022 $ 841

In the fourth quarter of fiscal 2022, the Company announced that it had agreed to the sale of a significant amount of patent assets to 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 contemplated 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.

Other Long-term Assets

As at November 30, 2021 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.

As at May 31, 2022 and February 28, 2022, 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.

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 (unaudited)

Accrued Liabilities

Accrued liabilities comprised the following:

November 30, 2021 February 28, 2021

May 31, 2022 February 28, 2022

Accrued settlement (note 9)

Accrued royalties 20 20

Operating lease liabilities, current 27 28

Other 149 145

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

For the nine months ended November 30, 2021, the Company’s net effective income tax expense rate was approximately 5 % compared to a net effective income tax recovery rate of 1 % for the nine months ended November 30, 2020.

Other accrued liabilities include accrued director fees, accrued vendor liabilities, accrued carrier liabilities, variable incentive accrual 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.

For the three months ended May 31, 2022, the Company’s net effective income tax expense rate was approximately 2 % compared to a net effective income tax expense rate of 3 % for the three months ended May 31, 2021.

The Company’s income tax rate reflects the change in unrecognized income tax benefit, if any, and the fact that the Company has a significant valuation allowance against its deferred income tax assets, and in particular, the change in fair value of the 1.75% Debentures (as defined in Note 5), amongst other items, is offset by a corresponding adjustment of the valuation allowance.

The Company’s net effective income tax rate also reflects the geographic mix of earnings in jurisdictions with different income tax rates.

The Company’s total unrecognized income tax benefits as at November 30, 2021 were $ 19 million (February 28, 2021 - $ 24 million).

As at November 30, 2021, $ 19 million of the unrecognized income tax benefits have been netted against deferred income tax assets and nil has been recorded within income taxes payable on the Company’s consolidated balance sheets.

The Company’s total unrecognized income tax benefits as at May 31, 2022 were $ 20 million (February 28, 2022 - $ 20 million).

As at May 31, 2022, $ 20 million of the unrecognized income tax benefits have been netted against deferred income tax assets and nil has been recorded within income taxes payable on the Company’s consolidated balance sheets.

The Company is subject to ongoing examination by tax authorities in certain jurisdictions in which it operates.

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While the final resolution of audits is uncertain, the Company believes the ultimate resolution of these audits will not have a material adverse effect on its consolidated financial position, liquidity or results of operations.

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

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 (unaudited)

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”).

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.

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”).

Due to the conversion option and other embedded derivatives within the 1.75% 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.

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 1.75% Debentures associated with non-credit components are recognized in income, while the change in fair value associated with credit components is recognized in accumulated other comprehensive loss (“AOCL”).

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 fair value of the 1.75% Debentures has been determined using the significant Level 2 inputs interest rate curves, 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 6.27 % as of November 30, 2021.

The Company’s credit spread was determined to be 7.90 % as of the issuance date of the 1.75% Debentures and 7.31 % as of May 31, 2022.

An increase in credit spread will result in a decrease in the fair value of 1.75% Debentures and vice versa.

The fair value of the 1.75% Debentures on September 1, 2020 was determined to be approximately $ 456 million and the implied discount approximately $ 91 million.

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 change in fair value of the 1.75% Debentures for the nine months ended November 30, 2021, which also represents the total changes through earnings of items classified as Level 3 in the fair value hierarchy:

November 30, 2021

Balance as at February 28, 2021 $ 720

Change in fair value of the Debentures ( 47 )

Balance as at November 30, 2021 $ 673

The difference between the fair value of the 1.75% Debentures and the unpaid principal balance of $ 365 million is $ 308 million.

The following table shows the impact of the changes in fair value of the 1.75% Debentures for the three and nine months ended November 30, 2021 and November 30, 2020:

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Income (charge) associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ 110 $ ( 89 ) $ 47 $ ( 89 )

Charge associated with the change in fair value from instrument-specific credit components recorded in AOCL ( 1 ) ( 5 ) — ( 5 )

Total decrease (increase) in the fair value of the 1.75% Debentures $ 109 $ ( 94 ) $ 47 $ ( 94 )

For the three and nine months ended November 30, 2021, the Company recorded interest expense related to the Debentures of $ 2 million and $ 5 million, respectively, which has been included in investment income (loss), net on the Company’s consolidated statements of operations (three and nine months ended November 30, 2020 - $ 2 million and $ 13 million).

The Company determined the implied discount on the 1.75% Debentures by calculating the

BlackBerry Limited

1 unchanged sentence

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

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 change in fair value of the 1.75% Debentures for the three months ended May 31, 2022, which also represents the total changes through earnings of items classified as Level 3 in the fair value hierarchy:

Balance as at February 28, 2022 $ 507

Change in fair value of the 1.75% Debentures ( 48 )

Balance as at May 31, 2022 $ 459

The difference between the fair value of the 1.75% Debentures and the unpaid principal balance of $ 365 million is $ 94 million.

The following table shows the impact of the changes in fair value of the 1.75% Debentures for the three months ended May 31, 2022 and May 31, 2021:

Three Months Ended

May 31, 2022 May 31, 2021

Income associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ 46 $ 4

Income associated with the change in fair value from instrument-specific credit components recorded in AOCL 2 1

Total decrease in the fair value of the 1.75% Debentures $ 48 $ 5

For the three months ended May 31, 2022, the Company recorded interest expense related to the 1.75% Debentures of $ 2 million, which has been included in investment loss, net on the Company’s consolidated statements of operations (three months ended May 31, 2021 - $ 2 million).

Fairfax, a related party under U.S.

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 to Fairfax represent related party transactions.

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

As such, the payment of interest on the 1.75% Debentures to Fairfax represents a related party transaction.

Fairfax receives interest at the same rate as other holders of the 1.75% 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.

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 to the consolidated statements of operations of the redemption on the fair value was recorded in the second quarter of fiscal 2021.

The following table shows the impact of the changes in fair value of the 3.75% Debentures for the three and nine months ended November 30, 2021 and November 30, 2020:

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Charge associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ — $ — $ — $ ( 19 )

Income associated with the change in fair value from instrument-specific credit components recorded in AOCL — — — 15

Realized charges associated with the change in fair value from credit components recorded in the consolidated statements of operations on redemption — ( 6 ) — ( 6 )

Realized charges associated with the change in fair value from credit components released from AOCL on redemption — 6 — 6

Total increase in the fair value of the 3.75% Debentures $ — $ — $ — $ ( 4 )

CAPITAL STOCK

The following details the changes in issued and outstanding common shares for the nine months ended November 30, 2021:

The following details the changes in issued and outstanding common shares for the three months ended May 31, 2022:

Capital Stock and

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Common shares issued for employee share purchase plan 458 3

Common shares outstanding as at November 30, 2021 573,667 $ 2,857

The Company had 574 million voting common shares outstanding, 1 million options to purchase voting common shares, 12 million RSUs and 2 million DSUs outstanding as at December 17, 2021.

Common shares outstanding as at May 31, 2022 577,169 $ 2,880

The Company had 577 million voting common shares outstanding, 1 million options to purchase voting common shares, 15 million RSUs and 2 million DSUs outstanding as at June 21, 2022.

In addition, 60.8 million common shares are issuable upon conversion in full of the 1.75% Debentures as described in Note 5.

2 unchanged sentences

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

EARNINGS (LOSS) PER SHARE

The following table sets forth the computation of basic and diluted earnings (loss) per share:

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Net income (loss) for basic earnings (loss) per share available to common shareholders $ 74 $ ( 130 ) $ ( 132 ) $ ( 789 )

LOSS PER SHARE

The following table sets forth the computation of basic and diluted loss per share:

Three Months Ended

May 31, 2022 May 31, 2021

Net loss for basic loss per share available to common shareholders $ ( 181 ) $ ( 62 )

1.75% Debentures fair value adjustment (1) (2)

( 110 ) — ( 47 ) —

interest expense on 1.75% Debentures (1) (2)

4 unchanged sentences

Conversion of 1.75% Debentures (1) (2)

60,833 — 60,833 —

Weighted average number of shares and assumed conversions (000’s) diluted 637,710 567,358

Earnings (loss) per share - reported

Loss per share - reported

$ ( 0.31 ) $ ( 0.11 )

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______________________________

(1) The Company has presented the dilutive effect of the Debentures using the if-converted method, assuming conversion at the beginning of the quarter for the three and nine months ended November 30, 2021.

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 for the three and nine months ended November 30, 2021, and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

(1) The Company has presented the dilutive effect of the 1.75% Debentures using the if-converted method, assuming conversion at the beginning of the quarter for the three months ended May 31, 2022.

Accordingly, to calculate diluted loss per share, the Company adjusted net loss by eliminating the fair value adjustment made to the 1.75% Debentures and interest expense incurred on the 1.75% Debentures for the three months ended May 31, 2022, and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

See Note 5 for details on the 1.75% Debentures.

(2) 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 three and nine months ended November 30, 2020, as to do so would be antidilutive.

(2) The Company has not presented the dilutive effect of the 1.75% Debentures using the if-converted method in the calculation of diluted loss per share for the three months ended May 31, 2021, as to do so would be antidilutive.

See Note 5 for details on the 1.75% Debentures.

(3) The three and nine months ended November 30, 2021, includes approximately 1,421,945 common shares (Exchange Shares) remaining to be issued on the third anniversary date of the Cylance acquisition completed on February 21, 2019, in consideration for the acquisition.

The three and nine months ended November 30, 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 loss per share for the three and nine months ended November 30, 2021 and November 30, 2020, as to do so would be antidilutive.

(3) The three months ended May 31, 2021, includes approximately 1,421,945 common shares (Exchange Shares) remaining that were subsequently issued on the third anniversary date of the Cylance acquisition completed on February 21, 2019 in consideration for the acquisition.

(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 three months ended May 31, 2022 and May 31, 2021, as to do so would be antidilutive.

BlackBerry Limited

2 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in AOCL by component net of tax, for the three and nine months ended November 30, 2021 and November 30, 2020 were as follows:

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

The changes in AOCL by component net of tax, for the three months ended May 31, 2022 and May 31, 2021 were as follows:

Three Months Ended

May 31, 2022 May 31, 2021

Cash Flow Hedges

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Other comprehensive income before reclassification 1 2

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

Amounts reclassified from AOCL into net loss — ( 1 )

Accumulated net unrealized gains on derivative instruments designated as cash flow hedges $ 1 $ 2

5 unchanged sentences

Balance, beginning of period $ ( 8 ) $ ( 9 )

Other comprehensive income (loss) before reclassification ( 1 ) ( 5 ) — 10

Amounts reclassified from AOCL into net income (loss) — 7 — 6

Other comprehensive income before reclassification 2 1

Change in fair value from instruments-specific credit risk on 1.75% Debentures $ ( 6 ) $ ( 8 )

4 unchanged sentences

(a) Letters of Credit

The Company had $ 27 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business as of November 30, 2021.

The Company had $ 26 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business as of May 31, 2022.

See the discussion of restricted cash in Note 2.

6 unchanged sentences

Regardless of whether claims against the Company have merit, those claims could be time-consuming to evaluate and defend, result in costly litigation, divert management’s attention and resources and subject the Company to significant 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 (unaudited)

Management reviews all of the relevant facts for each claim and applies judgment in evaluating the likelihood and, if applicable, the amount of any potential loss.

1 unchanged sentence

Where a range of loss can be reasonably estimated with no best estimate in the range, the Company records the minimum amount in the range.

The Company does not provide for claims for which the outcome is not determinable or claims for which the amount of the loss cannot be reasonably estimated.

The Company does not provide for claims for which the outcome is not determinable or claims for which the amount 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 (unaudited)

the loss cannot be reasonably estimated.

Any settlements or awards under such claims are provided for when reasonably determinable.

As of November 30, 2021, there are no material claims outstanding for which the Company has assessed the potential loss as both probable to result and reasonably estimable;

As of May 31, 2022, with the exception of the U.S.

class actions settlement discussed in “Litigation Settlement“ below in this Note 9, there are no other material claims outstanding for which the Company has assessed the potential loss as both probable to result and reasonably estimable;

therefore, no accrual has been made.

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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;

5 unchanged sentences

and Canada alleging that the Company and certain of its officers made materially false and misleading statements regarding the Company’s financial condition and business prospects and that certain of the Company’s financial statements contain material misstatements.

The individual lawsuit was voluntarily dismissed.

On March 14, 2014, the four putative U.S.

class actions were consolidated in the U.S.

District Court for the Southern District of New York, and on May 27, 2014, a consolidated amended class action complaint was filed.

On March 13, 2015, the Court issued an order granting the Company’s motion to dismiss.

The Court denied the plaintiffs’ motion for reconsideration and for leave to file an amended complaint on November 13, 2015.

On August 24, 2016, the U.S.

Court of Appeals for the Second Circuit affirmed the District Court order dismissing the complaint, but vacated the order denying leave to amend and remanded to the District Court for further proceedings in connection with the plaintiffs’ request for leave to amend.

The Court granted the plaintiffs’ motion for leave to amend on September 13, 2017.

On September 29, 2017, the plaintiffs filed a second consolidated amended class action complaint (the “Second Amended Complaint”), which added the Company’s former Chief Legal Officer as a defendant.

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 Ulug filed a Notice of Appeal.

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.

All discovery was completed as of November 13, 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 Period”).” The class excludes (a) all persons and entities who purchased or otherwise acquired BlackBerry Limited common stock between March 28, 2013, and April 10, 2013, and who sold all their BlackBerry Limited common stock before April 11, 2013, and (b) the Defendants, officers and directors of BlackBerry Limited, 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 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.

Both sides filed oppositions to these motions on June 21, 2021.

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 (unaudited)

Defendants filed a reply in support of their summary judgment motion and a motion to strike Plaintiffs’ response to Defendants’ separate statement of undisputed facts on July 22, 2021.

Plaintiffs filed an opposition to the motion to strike on August 5, 2021, and Defendants filed a reply in support on August 10, 2021.

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

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

The Court has not set a trial date.

The individual lawsuit was voluntarily dismissed and the U.S.

class actions reached an agreement in principle to settle;

see “Litigation Settlement“ below in this Note 9.

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

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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.

As at November 30, 2021, the liability recorded in association with this award is approximately $ 8 million (February 28, 2021 - $ 8 million).

As at November 30, 2021, the Company has recognized $ 16 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 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.

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

however, certain components are currently obtained from limited sources within a competitive market, which subjects the Company to supply, availability and pricing risks.

The Company has also entered into various agreements for the supply of components, and the manufacturing of its products;

however, there can be no guarantee that the Company will be able to extend or renew these agreements on similar terms, or at all.

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

As at May 31, 2022, the liability recorded in association with this award is approximately $ 1 million (February 28, 2022 - $ 2 million).

BlackBerry Limited

1 unchanged sentence

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

As at May 31, 2022, the Company has recognized $ 17 million (February 28, 2022 - $ 17 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.

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.

On March 14, 2014, the four putative U.S.

class actions were consolidated in the U.S.

District Court for the Southern District of New York, and on May 27, 2014, a consolidated amended class action complaint was filed.

On March 13, 2015, the Court issued an order granting the Company’s motion to dismiss.

The Court denied the plaintiffs’ motion for reconsideration and for leave to file an amended complaint on November 13, 2015.

On August 24, 2016, the U.S.

The Court granted the plaintiffs’ motion for leave to amend on September 13, 2017.

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

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

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 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.

The Second Circuit Court of Appeals denied the defendants’ petition for review of the class certification order on June 23, 2021.

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

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

On September 10, 2021.

the Court granted the 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 denied defendants’ motion for summary judgment except with respect to seven statements the Court found were barred by the statute of repose.

On April 6, 2022, the parties accepted a mediator’s proposal, and reached an agreement in principle to settle the U.S.

consolidated actions for $ 165,000,000 .

The settlement is subject to preliminary and final approval by the Court.

The Stipulation of Settlement was executed effective June 7, 2022, the Court granted plaintiffs’ motion for preliminary approval of the settlement on June 14, 2022, and scheduled the final approval hearing for September 29, 2022.

In the first quarter of fiscal 2023, the Company accrued $ 165 million associated with this settlement within the line Litigation settlement on the consolidated statement of operations.

(d) Indemnifications

6 unchanged sentences

The Company has not encountered material costs as a result of such indemnifications in the current period.

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 (unaudited)

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

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 of the Company, makes decisions and assesses the performance of the Company using three operating segments.

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

1 unchanged sentence

Segment Disclosures

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

The Company is 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 following table shows information by operating segment for the three and nine months ended November 30, 2021 and November 30, 2020:

The following table shows information by operating segment for the three months ended May 31, 2022 and May 31, 2021:

For the Three Months Ended

Cybersecurity IoT Licensing and Other Segment Totals

November 30, November 30, November 30, November 30,

2021 2020 2021 2020 2021 2020 2021 2020

Segment revenue $ 128 $ 130 $ 43 $ 32 $ 13 $ 56 $ 184 $ 218

Segment cost of sales 52 53 8 6 6 9 66 68

Segment gross margin (1)

$ 76 $ 77 $ 35 $ 26 $ 7 $ 47 $ 118 $ 150

For the Nine Months Ended

Cybersecurity IoT Licensing and Other Segment Totals

November 30, November 30, November 30, November 30,

May 31, May 31, May 31, May 31,

2022 2021 2022 2021 2022 2021 2022 2021

5 unchanged sentences

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

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 (unaudited)

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

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 (“UEM”) 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® Gateway, BlackBerry® Guard managed services and other cybersecurity applications.

In addition, the Company offers the BlackBerry Cyber Suite, a UEM-agnostic version of its BlackBerry Spark UES Suite.

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 Spark® Unified Endpoint Security 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 UES Suite includes revenue from the Company’s Cylance® artificial intelligence and machine learning-based platform consisting of CylancePROTECT®, CylanceOPTICS®, CylancePERSONA®, CylanceGATEWAY™, CylanceGUARD® managed services and other cybersecurity applications.

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

3 unchanged sentences

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.

The following table reconciles total segment gross margin for the three and nine months ended November 30, 2021 and November 30, 2020 to the Company’s consolidated totals:

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Other consists of the Company’s legacy service access fees (“SAF”) business, which ceased operations on January 4, 2022.

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 (unaudited)

The following table reconciles total segment gross margin for the three months ended May 31, 2022 and May 31, 2021 to the Company’s consolidated totals:

Three Months Ended

May 31, 2022 May 31, 2021

Total segment gross margin $ 105 $ 115

Adjustments (1) :

Cost of sales 1 1 3 4

Stock compensation 1 1

Research & development 53 57

1 unchanged sentence

Amortization 27 46

Impairment of long-lived assets — — — 21

Impairment of goodwill — — — 594

Debentures fair value adjustment ( 46 ) ( 4 )

Investment income (loss), net ( 25 ) 1 ( 22 ) 6

Consolidated income (loss) before income taxes $ 76 $ ( 128 ) $ ( 126 ) $ ( 800 )

Litigation settlement 165 —

Investment loss, net 1 2

Consolidated loss before income taxes $ ( 178 ) $ ( 60 )

______________________________

1 unchanged sentence

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

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 (unaudited)

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:

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Three Months Ended

May 31, 2022 May 31, 2021

North America (1)

$ 101 $ 147 $ 313 $ 492

Europe, Middle East and Africa 60 45

8 unchanged sentences

(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.

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 (unaudited)

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

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Three Months Ended

May 31, 2022 May 31, 2021

Products and services transferred over time $ 97 $ 107

2 unchanged sentences

Revenue contract balances

The following table sets forth the activity in the Company’s revenue contract balances for the nine months ended November 30, 2021:

The following table sets forth the activity in the Company’s revenue contract balances for the three months ended May 31, 2022:

Accounts Receivable Deferred Revenue Deferred Commissions

3 unchanged sentences

Decrease, net ( 36 ) ( 22 ) —

Closing balance as at November 30, 2021 $ 138 $ 235 $ 17

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 (unaudited)

Closing balance as at May 31, 2022 $ 102 $ 222 $ 16

Transaction price allocated to the remaining performance obligations

The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at November 30, 2021 and the time frame in which the Company expects to recognize this revenue.

The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at May 31, 2022 and the time frame in which the Company expects to recognize this revenue.

The disclosure includes estimates of variable consideration, except when the variable consideration is a sales-based or usage-based royalty promised in exchange for a license of intellectual property.

As at November 30, 2021

As at May 31, 2022

Less than 12 Months 12 to 24 Months Thereafter Total

Remaining performance obligations $ 191 $ 27 $ 10 $ 228

Revenue recognized for performance obligations satisfied in prior periods

For the three and nine months ended November 30, 2021, $ 1 million of revenue was recognized for performance obligations satisfied in a prior period (three and nine months ended November 30, 2020 - $ 2 million of revenue was recognized relating to performance obligations satisfied in a prior period).

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:

November 30, 2021 February 28, 2021

May 31, 2022 February 28, 2022

Property, Plant and Equipment, Intangible Assets, Operating Lease ROU Assets and Goodwill Total Assets Property, Plant and Equipment, Intangible Assets, Operating Lease ROU Assets and Goodwill Total Assets

4 unchanged sentences

Information About Major Customers

There was one customer that comprised 14 % and 11 % of the Company’s revenue in the three and nine months ended November 30, 2021, respectively (three and nine months ended November 30, 2020 - one customer that comprised 13 % and 27 % of the Company’s revenue, respectively).

There was one customer that comprised 15 % of the Company’s revenue in the three months ended May 31, 2022 (three months ended May 31, 2021 - no customer comprised more than 10% of the Company’s revenue).

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 (unaudited)

CASH FLOW AND ADDITIONAL INFORMATION

(a) Certain consolidated statements of cash flow information related to interest and income taxes paid is summarized as follows:

Three Months Ended Nine Months Ended

November 30, 2021 November 30, 2020 November 30, 2021 November 30, 2020

Three Months Ended

May 31, 2022 May 31, 2021

Interest paid during the period $ 2 $ 2

4 unchanged sentences

The Company is exposed to foreign exchange risk as a result of transactions in currencies other than its functional currency, the U.S.

The majority of the Company’s revenue in the third quarter of fiscal 2022 was transacted in U.S.

The majority of the Company’s revenue in the first quarter of fiscal 2023 was transacted in U.S.

Portions of the revenue were denominated in Canadian dollars, euros and British pounds.

1 unchanged sentence

dollars, euros and British pounds.

At November 30, 2021, approximately 28 % of cash and cash

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 (unaudited)

equivalents, 46 % of accounts receivable and 29 % of accounts payable were denominated in foreign currencies (February 28, 2021 – 20 %, 25 % and 34 %, respectively).

At May 31, 2022, approximately 21 % of cash and cash equivalents, 7 % of accounts receivable and 40 % of accounts payable were denominated in foreign currencies (February 28, 2022 – 37 %, 23 % and 30 %, respectively).

These foreign currencies primarily include the Canadian dollar, euro and British pound.

11 unchanged sentences

The Company reduces this risk by investing in liquid, investment-grade securities and by limiting exposure to any one entity or group of related entities.

As at November 30, 2021, 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.

As at November 30, 2021, the Company had nil collateral posted with counterparties (February 28, 2021 - nil in collateral held or posted).

As at May 31, 2022, no single issuer represented more than 14 % of the total cash, cash equivalents and investments (February 28, 2022 - no single issuer represented more than 10 % of the total cash, cash equivalents and investments), with the largest such issuer representing non-US government debt securities.

Liquidity risk

Cash, cash equivalents, and investments were approximately $ 772 million as at November 30, 2021.

Cash, cash equivalents, and investments were approximately $ 721 million as at May 31, 2022.

The Company’s management remains focused on efficiently managing working capital balances and managing the liquidity needs of the business.

1 unchanged sentence

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 October 2021.

The CEWS provides a subsidy of up to 75 % of eligible employees’ employment insurable remuneration, subject to certain criteria.

The extension also includes a gradual decrease to the subsidy rate.

The Company applied for the CEWS to the extent it met the requirements to receive the subsidy and during the three and nine months ended November 30, 2021, recorded $ 3 million and $ 30 million, respectively, in government subsidies as a reduction to operating expenses in the consolidated statement of operations (November 30, 2020 - $ 10 million and $ 37 million, respectively).

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.

The programs were subsequently extended to

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 (unaudited)

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 and ran until May 7, 2022 .

The Company applied for the CEWS, CERS and HHBRP to the extent it met the requirements to receive the subsidy and during the three months ended May 31, 2022, recorded $ 4 million in government subsidies as a reduction to operating expenses in the consolidated statement of operations (May 31, 2021 - $ 15 million).

As at May 31, 2022, the Company has recorded $ 4 million in accrued government subsidies within other receivables on the consolidated balance sheet (May 31, 2021 - $ 9 million).

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-Q

Item 1. Financial Statements