What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-03-31 compared with 2022-04-01 · 301 added, 394 removed, 1232 unchanged (36% of the section changed)

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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 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 have audited the accompanying consolidated balance sheets of BlackBerry Limited and its subsidiaries (together, the Company) as of February 28, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income (loss), of shareholders’ equity and of cash flows for each of the three years in the period ended February 28, 2023, 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, 2023, 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, 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.

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, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended February 28, 2023 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, 2023, based on criteria established in Internal Control – Integrated Framework (2013) issued by the COSO.

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.

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 Management’s Report on Internal Control Over Financial Reporting, appearing under Item 9A.

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.

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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;

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.

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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

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 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.

The impairment test is performed in one step by comparing the fair value of a reporting unit to its carrying value, including goodwill.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

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 matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Impairment Tests of Goodwill for the BlackBerry Spark Reporting Unit and of the Long-Lived Assets for the Unified Endpoint Security (UES) Asset Group

As described in Notes 1, 3 and 4 to the consolidated financial statements, the Company’s goodwill and intangible assets balances were $595 million and $203 million respectively, as of February 28, 2023.

A portion of the goodwill and intangible asset balances relates to the BlackBerry Spark reporting unit and UES asset group, respectively.

The long-lived assets (LLA) of the UES asset group are primarily composed of intangible assets.

Management conducts a goodwill impairment test annually on December 31, or more frequently if events or changes in circumstances indicate goodwill may be impaired.

In the impairment test, management compares the carrying value of a reporting unit, including goodwill, to its fair value.

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.

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;

Management reviews LLA for impairment whenever events or changes in circumstances indicate that the carrying value of the asset or asset group may not be recoverable.

Management identified indicators of potential impairment in the UES asset group, which required management to perform an impairment test that included determining the fair value of the UES asset group.

If the carrying value of the asset group’s net assets exceeds its fair value, then the excess represents the maximum amount of potential impairment that will be allocated to the LLA in the asset group.

Management utilized multiple valuation techniques, which included the income approach using a discounted future cash flow model among others in determining the fair value of a reporting unit or an asset group.

Estimating the fair value of a reporting unit or an asset group 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 results of the impairment tests related to goodwill and LLA, management concluded that the carrying values of the BlackBerry Spark reporting unit and UES asset group exceeded their respective fair values.

Management recorded impairment charges of $245 million and $231 million relating to the BlackBerry Spark reporting unit and UES asset group, respectively.

The principal considerations for our determination that performing procedures relating to the impairment tests of goodwill for the BlackBerry Spark reporting unit and of the long-lived assets for UES asset group is a critical audit matter are (i) the significant judgment by management when determining the fair values of the BlackBerry Spark reporting unit and UES asset group using discounted future cash flow models;

(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 discount rates;

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

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 management’s goodwill impairment test, including controls over the determination of the fair values of the Company’s reporting units.

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;

These procedures included testing the effectiveness of controls relating to management’s goodwill and LLA impairment tests for the BlackBerry Spark reporting unit and UES asset group, including controls over the determination of the respective fair values.

These procedures also included, among others, (i) testing management’s process for determining the fair values of the BlackBerry Spark reporting unit and UES asset group;

(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 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.

As disclosed by management, significant judgment is applied in assessing contractual terms which could impact the timing and amount of revenue recognition.

The principal considerations for our determination that performing procedures relating to the Revenue recognition – Intellectual property licensing is a critical audit matter are (i) significant judgment by management in assessing contractual terms which could impact the timing and amount of revenue recognition;

and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating evidence relating to the timing and amount of revenue recognition.

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 over the assessment of contractual terms in the intellectual property agreements which impact 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 sample 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 sample basis.

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.

/s/ PricewaterhouseCoopers LLP

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Toronto, Canada

April 1, 2022

March 31, 2023

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

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of BlackBerry Limited

Opinion on the Consolidated Financial Statements

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 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 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.

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.

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.

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

/s/ Ernst & Young LLP

Chartered Professional Accountants

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

Waterloo, Canada

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) 131 334

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

Accounts receivable, net of allowance of $ 1 and $ 4 , respectively (note 4 and note 12)

Other receivables (note 4) 12 25

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Other current assets (note 4) 182 159

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

Restricted cash and cash equivalents (note 3) 27 28

Long-term investments (note 3) 34 30

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Property, plant and equipment, net (note 4) 25 41

Goodwill (note 4) 844 849

Intangible assets, net (note 4) 522 771

Goodwill (note 3 and note 4) 595 844

Intangible assets, net (note 3 and note 4) 203 522

$ 1,679 $ 2,567

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Income taxes payable (note 5) 20 11

Debentures (note 6) 367 —

Deferred revenue, current (note 12) 175 207

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authorized unlimited number of non-voting, redeemable, retractable Class A common shares and unlimited number of voting common shares

Issued - 576,227,898 voting common shares (February 28, 2021 - 565,505,328 )

Issued and outstanding - 582,157,203 voting common shares (February 28, 2022 - 576,227,898 )

Deficit ( 2,028 ) ( 1,294 )

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Paid-in Capital Deficit Accumulated

Comprehensive Income (Loss) Total

Comprehensive Loss Total

Balance as at February 29, 2020 $ 2,760 $ ( 198 ) $ ( 33 ) $ 2,529

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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Balance as at February 28, 2022 2,869 ( 1,294 ) ( 19 ) 1,556

Net income — 12 — 12

Net loss — ( 734 ) — ( 734 )

Other comprehensive loss — — ( 5 ) ( 5 )

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Shares issued:

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

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

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Impairment of long-lived assets (note 3) 235 — 43

Gain on sale of property, plant and equipment, net (note 4) ( 6 ) — —

Debentures fair value adjustment (note 6) ( 138 ) ( 212 ) 372

Litigation settlement (note 10) 165 — —

1,144 469 1,750

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Other comprehensive income (loss)

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 ) ( 1 ) 2

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Impairment of long-lived assets (note 3)

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

Gain on sale of property, plant and equipment, net (note 4) ( 6 ) — —

Debentures fair value adjustment (note 6) ( 138 ) ( 212 ) 372

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Acquisition of property, plant and equipment ( 7 ) ( 8 ) ( 8 )

Proceeds on sale of property, plant and equipment (note 4) 17 — —

Acquisition of intangible assets ( 34 ) ( 31 ) ( 36 )

Business acquisitions, net of cash acquired — — 1

Acquisition of short-term investments ( 514 ) ( 916 ) ( 1,039 )

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Certain of the comparative figures have been reclassified to conform to the current year’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 12.

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.

In fiscal 2023, assumptions and estimates about future cash flows, the economic weakness and inflation resulting directly or indirectly from the COVID-19 pandemic and the invasion of Ukraine, as well as higher interest rates implemented in response to inflation and resulting fears of recession, 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.

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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.

Significant areas requiring the use of management estimates relate to revenue-related estimates including variable consideration, standalone selling price (“SSP”), estimated customer life, if control of licenses to intellectual property has transferred, the value of non-cash consideration, right of return and customer incentive commitments, fair value of reporting units in relation to actual or potential goodwill impairment, fair value of the Debentures (as defined in Note 6), fair value of share-based liability award, fair value of long-lived assets in relation to actual or potential impairment, the Company’s long-lived asset groupings, useful lives of property, plant and equipment and intangible assets, provision for income taxes, realization of deferred income tax assets and the related components of the valuation allowance, allowance for credit losses, incremental borrowing rate in determining the present value of lease liabilities and the determination of reserves for various litigation claims.

Significant areas requiring the use of management estimates relate to revenue-related estimates including variable consideration, standalone selling price (“SSP”), estimated customer life, if control of licenses to intellectual property has transferred, right of return and customer incentive commitments, fair value of reporting units in relation to actual or potential goodwill impairment, fair value of the Debentures (as defined in Note 6), fair value of share-based liability awards, fair value of long-lived assets in relation to actual or potential impairment, the Company’s long-lived asset groupings, estimated useful lives of property, plant and equipment and intangible assets, provision (or recovery) of income taxes, realization of deferred income tax assets and the related components of the valuation allowance, allowance for credit losses, incremental borrowing rates in determining the present value of lease liabilities and the determination of reserves for various litigation claims.

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, 2023.

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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dollar functional currency subsidiaries are translated into U.S.

Accordingly, monetary assets and liabilities are translated using the exchange rates in effect as at the consolidated balance sheet dates, and revenue and expenses are translated at the rates of exchange prevailing when the transactions occurred.

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 when the transactions occurred.

Remeasurement adjustments are included in income.

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Foreign currency denominated assets and liabilities of the Company’s non-U.S.

dollar functional currency subsidiaries are translated into U.S.

dollar functional currency subsidiary is translated into U.S.

dollars at the exchange rates in effect as at the consolidated balance sheet dates.

Revenue and expenses are translated using daily exchange rates.

Exchange gains or losses arising from translation of foreign currency denominated assets and liabilities are included as a currency translation adjustment within accumulated other comprehensive loss (“AOCL”).

Exchange gains or losses arising from the translation of foreign currency denominated assets and liabilities are included as a currency translation adjustment within accumulated other comprehensive loss (“AOCL”).

Cash and cash equivalents

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Accounts receivable, net of allowance

Accounting Standards Codification 326, Financial Instruments - Credit Losses (“ASC 326”)

On March 1, 2020, the Company adopted ASC 326 using the modified retrospective method.

The accounts receivable balance reflects invoiced and accrued revenue and is presented net of an allowance for credit losses.

The Company expects the majority of its accounts receivable balances to continue to come from large customers as it sells the majority of its software products and services through resellers and other distribution partners, rather than directly.

The Company establishes current expected credit losses (“CECL”) for pools of assets with similar risk characteristics by evaluating historical levels of credit losses, current economic conditions that may affect a customer’s ability to pay, and creditworthiness of significant customers.

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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 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.

The Company expected the majority of its accounts receivable balances to continue to come from large customers as it has sold and continues to sell, the majority of its software products and services through resellers and other distribution partners, rather than directly.

The Company evaluated the collectability of its accounts receivable balance based upon a combination of factors on a periodic basis such as specific credit risk of its customers, historical trends and economic circumstances.

The Company, in the normal course of business, monitored the financial condition of its customers and reviewed the credit history of each new customer.

When the Company became aware of a specific customer’s inability to meet its financial obligations to the Company (such as in the case of bankruptcy filings or material deterioration in the customer’s operating results or financial position, and payment experiences), the Company recorded a specific bad debt provision to reduce the customer’s related accounts receivable to its estimated net realizable value.

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 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.

Unrealized gains and losses, net of 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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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.

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

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

On March 1, 2020, the Company adopted ASC 326 on a modified retrospective basis.

Under ASC 326, at each reporting period, the Company evaluates its available-for-sale debt securities at the individual security level to determine whether there is a decline in the fair value below its amortized cost basis (an impairment).

On March 1, 2020, the Company adopted “Accounting Standards Codification 326, Financial Instruments - Credit Losses” (“ASC 326”) on a modified retrospective basis.

At each reporting period, the Company evaluates its available-for-sale debt securities at the individual security level to determine whether there is a decline in the fair value below its amortized cost basis (an impairment).

In circumstances where the Company intends to sell, or is more likely than not required to sell, the security before it recovers its amortized cost basis, the difference between fair value and amortized cost is recognized as a loss in the consolidated statement of operations, with a corresponding write-down of the security’s amortized cost.

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Improvements in expected cash flows due to improvements in credit are recognized through reversal of the credit loss and corresponding reduction in the allowance for credit loss.

Prior to the adoption of ASC 326, the Company assessed individual investments that were in an unrealized loss position to determine whether the unrealized loss was other-than-temporary.

The Company made this assessment by considering available evidence, including changes in general market conditions, specific industry and individual company data, the length of time and the extent to which the fair value had been less than cost, the financial condition, the near-term prospects of the individual investment and the Company’s intent and ability to hold the investment.

In the event that a decline in the fair value of an investment occurred and that decline in value was considered to be other-than-temporary, an impairment charge was recorded in investment income equal to the difference between the cost basis and the fair value of the individual investment as at the consolidated balance sheet date of the reporting period for which the assessment was made.

The fair value of the investment then became the new cost basis of the investment.

If a debt security’s market value was below its amortized cost and either the Company intended to sell the security or it was more likely than not that the Company would be required to sell the security before its anticipated recovery, the Company recorded an other-than-temporary impairment charge to investment income for the entire amount of the impairment.

For other-than-temporary impairments on debt securities that the Company did not intend to sell and it was not more likely than not that the entity would be required to sell the security before its anticipated recovery, the Company separated the other-than-temporary impairment into the amount representing the credit loss and the amount related to all other factors.

The Company recorded the other-than-temporary impairment related to the credit loss as a charge to investment income, and the remaining other-than-temporary impairment was recorded as a component of AOCL.

Derivative financial instruments

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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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dollar value of the associated asset, liability or forecasted transaction.

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, net

Property, plant and equipment are stated at cost, less accumulated amortization.

Property, plant and equipment are stated at cost, less accumulated amortization and impairment.

Amortization is provided using the following rates and methods:

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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 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.

In the annual impairment 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.

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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.

The carrying value of the Company’s assets was assigned to reporting units using reasonable methodologies based on the asset type.

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.

Different judgments could yield different results.

Events and circumstances resulted in an additional goodwill impairment test being conducted as at May 31, 2020, in addition to the Company’s annual impairment test;

Prior to the adoption of ASU 2017-04, the Company’s annual impairment test was carried out in two steps.

In the first step, 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, 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.

The carrying value of the Company’s assets was assigned to reporting units using reasonable methodologies based on the asset type.

When the carrying value of a reporting unit exceeded its fair value, goodwill of the reporting unit was considered to be impaired and the second step was necessary.

Different judgments could have yielded different results.

In fiscal 2020, the Company disaggregated one reporting unit and goodwill was assigned to the disaggregated reporting units based upon the relative fair value allocation approach.

In the second step, the implied fair value of the reporting unit’s goodwill was compared with its carrying value to measure the amount of the impairment loss, if any.

The second step involved significant judgment in the selection of assumptions necessary to arrive at an implied fair value of goodwill.

Different judgments could have yielded different results.

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.

The carrying value of the Company’s assets was assigned to reporting units using reasonable methodologies based on the

BlackBerry Limited

1 unchanged sentence

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

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.

Different judgments could yield different results.

Intangible assets

Intangible assets with definite lives are stated at cost, less accumulated amortization.

Intangible assets with definite lives are stated at cost, less accumulated amortization and impairment.

Amortization is provided on a straight-line basis over the following terms:

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GAAP, including the market approach, income approach and cost approach.

If the carrying value of the asset group’s net assets exceeds the fair value of the Company, then the excess represents the maximum amount of potential impairment that will be allocated to the asset group, with the limitation that the carrying value of each separable asset cannot be reduced to a value lower than its individual fair value.

If the carrying value of the asset group’s net assets exceeds its fair value, then the excess represents the maximum amount of potential impairment that will be allocated to LLA in the asset group, with the limitation that the carrying value of each separable asset cannot be reduced to a value lower than its individual fair value.

The total impairment amount allocated is recognized as a non-cash impairment loss.

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Convertible debentures

The Company elected to measure its outstanding convertible debentures (collectively, the “Debentures”, as defined in Note 6) at fair value in accordance with the fair value option.

The Company elected to measure its Debentures at fair value in accordance with the fair value option.

Each period, the fair value of the 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.

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To the extent the transaction price includes variable consideration, the Company estimates the amount of variable consideration that should be included in the transaction price utilizing either the expected value method or the most likely amount method depending on the nature of the variable consideration.

Non-cash consideration received is measured at fair value at contract inception.

The estimated fair value is determined utilizing multiple valuation techniques, including the discounted future cash flows and the market-based approach.

Contracts that contain multiple performance obligations require an allocation of the transaction price to each performance obligation based on a relative SSP.

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Cybersecurity

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

Cybersecurity includes revenue from the Company’s BlackBerry Spark® software platform which includes unified endpoint security (“UES”) and unified endpoint management (“UEM”) solutions, 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.

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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 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, CylancePROTECT Mobile™ and other cybersecurity applications.

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

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

The BlackBerry Spark UES 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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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 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

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If access to the Company’s proprietary network infrastructure is not required, revenue associated with the license is recognized at a point in time upon delivery of the software.

Revenue from 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.

BlackBerry AtHoc and BlackBerry Alert

The Company recognizes the

BlackBerry Limited

1 unchanged sentence

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

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.

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.

IoT consists of BlackBerry Technology Solutions and BlackBerry IVY™.

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Licensing and Other

Licensing and Other includes revenue from the Company’s intellectual property licensing arrangements, BBM Consumer licensing arrangement, settlement awards and mobility licensing software arrangements, which include revenue from licensed hardware sales.

Licensing and Other includes revenue from the Company’s intellectual property licensing arrangements and settlement awards.

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

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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 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.

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

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 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.

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, for which the Company ended support and maintenance as of January 4, 2022.

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

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

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

Significant judgments in revenue recognition

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Any estimates, including any constraints on variable consideration, are evaluated at each reporting period.

Judgment is required to determine the fair value of non-cash consideration at contract inception.

The Company uses an independent third-party valuator for the fair value of non-cash consideration.

Judgment is required to determine the SSP for each distinct performance obligation.

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An unbilled receivable is recorded in instances when revenue is recognized prior to invoicing, and amounts collected in advance of services being provided are recorded as deferred revenue.

Contract assets and liabilities are presented net as either a single contract asset or contract liability.

Certain sales commissions are considered incremental and recoverable costs of obtaining a contract with a customer.

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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

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.

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.

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

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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.

The Company continually assesses the likelihood and amount of potential adjustments and

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

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.

The Company recognizes interest and penalties related to uncertain income tax positions as interest expense, which is then netted and reported within investment income.

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Comprehensive income (loss) is defined as the change in net assets of a business enterprise during a period from transactions and other events and circumstances from non-owner sources and includes all changes in equity during a period, except those resulting from investments by owners and distributions to owners.

The Company’s reportable items of comprehensive income (loss) are the cumulative translation adjustment resulting from non-U.S.

dollar functional currency subsidiaries as described under the foreign currency translation policy above, cash flow hedges as described above in derivative financial instruments, changes in the fair value of available-for-sale investments as described in Note 3, changes in fair value from instrument-specific credit risk on the Debentures as described in Note 6 and Note 9, and actuarial gains or losses associated with certain other post-employment benefit obligations.

The Company’s reportable items of comprehensive income (loss) are the cumulative translation adjustment resulting from its non-U.S.

dollar functional currency subsidiary as described under the foreign currency translation policy above, cash flow hedges as described above in derivative financial instruments, changes in the fair value of available-for-sale investments as described in Note 3, changes in fair value from instrument-specific credit risk on the Debentures as described in Note 6 and Note 9, and actuarial gains or losses associated with certain other post-employment benefit obligations.

Realized gains or losses on available-for-sale investments are reclassified into investment income using the specific identification basis.

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

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.

The number of common 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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(“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.

The Cylance Stock Plan provided 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 were 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 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.

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 measures stock-based compensation expense for options at the grant date based on the award’s fair value as calculated by the Black-Scholes-Merton (“BSM”) option pricing model for stock options, and the expense is recognized ratably over the vesting period.

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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

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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 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.

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.

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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).

The Company adopted this guidance in 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

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.

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.

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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

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 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.

ASU 2021-10, Government Assistance

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

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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.

The Company adopted this guidance in the first quarter of fiscal 2023 and it did not have a material impact on its annual disclosures.

FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS

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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.

The Company’s cash and cash equivalents, accounts receivable, other receivables, accounts payable and accrued liabilities are carried at amounts that approximate their fair values (Level 2 measurement) due to their short maturities.

Recurring Fair Value Measurements

The Company’s cash and cash equivalents, accounts receivable, other receivables, accounts payable and accrued liabilities are measured at an amount that approximates their fair values (Level 2 measurement) due to their short maturities.

In determining the fair value of investments held, the Company primarily relies on an independent third-party valuator for the fair valuation of securities.

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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 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.

The 3.75% Debentures (as defined in Note 6) were classified as Level 2 and the 1.75% Debentures (as defined in Note 6) are classified as Level 3.

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

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

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.

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, 2023, February 28, 2022 or February 28, 2021.

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

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

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).

Non-Recurring Fair Value Measurements

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Goodwill Impairment

During the fourth quarter of fiscal 2023, as part of its process for setting the annual operating plan for fiscal 2024, the Company updated its estimates of long-term future cash flows to reflect lower revenue and EBITDA growth rate expectations and a reduction in revenue multiples used in the valuation of the BlackBerry Spark reporting unit.

These changes in estimates, combined with the global economic weakness and inflation resulting directly or indirectly from the COVID-19 pandemic and the Russian invasion of Ukraine, higher interest rates implemented in response to inflation, and a broad-based stock market decline impacting the Company’s market capitalization, resulted in the recognition of a goodwill impairment charge of $ 245 million in the BlackBerry Spark reporting unit, which is included within the Company’s Cybersecurity segment as disclosed in Note 12.

Based on the results of the annual goodwill impairment test for the BlackBerry Spark reporting unit, based on the income approach using a discounted future cash flow model and market-based approaches, it was concluded that the carrying value exceeded its fair value, necessitating an impairment charge for the amount of excess and reducing the carrying value of goodwill.

The estimated fair values of the Company’s other reporting units substantially exceeded their carrying values as at the annual goodwill impairment test date.

Assumptions and estimates about future cash flows and discount rates are complex and often subjective and require significant judgement.

The analysis 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.

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.

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, 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.

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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.

Consequently, the Company recorded a goodwill impairment charge 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.

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

Impairment of Long-Lived Assets (“LLA”)

During the fourth quarter of fiscal 2023, market conditions and changes in the Company’s estimates as described above under “Goodwill Impairment” provided indicators of potential impairment in the Company’s UES asset group, which is primarily composed of intangible assets recognized in the acquisition of Cylance and is included within the Company’s Cybersecurity segment as disclosed in Note 12.

The Company performed the two-step impairment testing process as described in Note 1, utilizing the income approach using a discounted future cash flow model and market-based approaches, and concluded that the carrying values of the Company’s UES asset group exceeded their fair values, necessitating an impairment charge of $ 231 million.

None of the Company’s other asset groups demonstrated indicators of potential impairment.

Assumptions and estimates about future cash flows and discount rates are complex and often subjective and require significant judgement.

The analysis is dependent on internal forecasts, estimation of the long-term growth rates for revenue and cash flows associated with the Company’s asset groups, estimation of the useful life over which those cash flows will occur, terminal growth rates, profitability measures, and determination of the discount rates for the asset groups.

In addition, the Company exited certain leased facilities during the year ended February 28, 2023 and is in the process of seeking subleases for those properties.

The Company recorded a non-cash, pre-tax and after-tax impairment charge of $ 4 million related to the operating lease right-of-use (“ROU”) assets for 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 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 28, 2022, there were no LLA impairment charges.

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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

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Investments Long-term

Investments Restricted Cash Equivalents

Investments Restricted Cash and Cash Equivalents

Bank balances $ 89 $ — $ — $ 89 $ 87 $ — $ — $ 2

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

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

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

Term deposits and certificates of deposits 33 — — 33 8 — — 25

Bearer deposit notes 82 — — 82 82 — — —

Commercial paper 159 — — 159 108 51 — —

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government sponsored enterprise notes 30 — — 30 10 20 — —

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

Corporate notes/bonds 15 — — 15 — 15 — —

364 — — 364 208 131 — 25

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______________________________

(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

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Investments Long-term

Investments Restricted Cash Equivalents Restricted Short-term Investments

Investments Restricted Cash and Cash Equivalents

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

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Equity securities 10 — ( 9 ) 1 — 1 — —

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

Bearer deposit notes 40 — 40 — 40 — — —

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

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 and impairment.

As at February 28, 2023, the Company had non-marketable equity investments without readily determinable fair value of $ 34 million (February 28, 2022 - $ 30 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).

During the year ended February 28, 2023, there was no impairment recognized relating to non-marketable equity investments without readily determinable fair value (February 28, 2022 and February 28, 2021 - nil ).

As of February 28, 2023, 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).

During the year ended February 28, 2022, the Company 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.

There were no realized gains or losses on available-for-sale securities for the year ended February 28, 2023 (February 28, 2022 and February 28, 2021 - nil ).

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.

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;

21 unchanged sentences

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.

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.

6 unchanged sentences

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

For the Year Ended

February 28, 2022

Carrying Amount

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 ( 2 )

Current period provision for expected credit losses 1

Write-offs charged against the allowance ( 4 )

Ending balance of the allowance for credit loss as at February 28, 2023 $ 1

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%).

The allowance for credit losses as at February 28, 2023 consists of $ 1 million (February 28, 2022 - $ 2 million) relating to CECL estimated based on days past due and region and nil (February 28, 2022 - $ 2 million) relating to specific customers that were evaluated separately.

There were two customers that comprised more than 10% of accounts receivable as at February 28, 2023 (February 28, 2022 - no 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.

As at February 28, 2023, other receivables included items such as claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX, among other items, none of which were greater than 5% of the current assets balance.

As at 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.

Other Current Assets

2 unchanged sentences

Intellectual property $ 141 $ 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.

On March 21, 2023, the Company entered into an agreement to sell substantially all of the Company’s non-core patent assets to Malikie Innovations Limited (“Malikie”) for $ 170 million in cash on closing, an additional $ 30 million in cash by no later than the third anniversary of closing and potential future royalties in the aggregate amount of up to $ 900 million.

Contemporaneously, the Company also terminated a prior agreement with Catapult IP Innovations, Inc.

(“Catapult”) relating to the proposed sale of the patent portfolio subject to the Malikie agreement as well as certain additional non-core patents.

See Note 14 on subsequent events.

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

As at February 28, 2023, the Company continued to classify $ 141 million of intellectual property, which included the initial $ 118 million referred to above with additions related to patent maintenance, 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.

13 unchanged sentences

February 28, 2021 - $ 21 million).

Sale of Property, Plant and Equipment, Net

During the year ended February 28, 2023, the Company sold its corporate aircraft.

As a result, the Company recorded proceeds of approximately $ 17 million and incurred a gain on disposal of approximately $ 6 million (cost of $ 29 million, accumulated amortization of $ 18 million, and a net book value of approximately $ 11 million).

Intangible Assets, Net

16 unchanged sentences

February 28, 2021 - $ 177 million).

Total additions to intangible assets in fiscal 2022 amounted to $ 31 million (fiscal 2021 - $ 36 million).

Total additions to intangible assets in fiscal 2023 amounted to $ 34 million (fiscal 2022 - $ 31 million) and included additions related to patent maintenance classified as other current assets on the Company’s consolidated balance sheets.

During fiscal 2023, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

The Company recorded an impairment charge of $ 231 million in fiscal 2023, see Note 3 for further details.

Based on the carrying value of the identified intangible assets as at February 28, 2023, 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:

2 unchanged sentences

fiscal 2026 - $ 37 million;

fiscal 2026 - $ 85 million;

and fiscal 2027 - $ 79 million.

fiscal 2027 - $ 32 million and fiscal 2028 - $ 19 million.

BlackBerry Limited

9 unchanged sentences

Carrying amount as at February 29, 2020 $ 1,437

Measurement period adjustment (1)

Goodwill impairment charge (note 3) ( 594 )

2 unchanged sentences

Carrying amount as at February 28, 2021 849

Goodwill impairment charge (note 3) ( 594 )

Effect of foreign exchange on non-U.S.

3 unchanged sentences

dollar denominated goodwill ( 4 )

Goodwill impairment charge (note 3) ( 245 )

Carrying amount as at February 28, 2023 $ 595

______________________________

(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

5 unchanged sentences

Operating lease liabilities, current (note 11)

Other 109 125

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.

15 unchanged sentences

Other differences 9 — ( 4 )

Withholding tax on unremitted earnings — — ( 1 )

$ 14 $ 7 $ ( 9 )

13 unchanged sentences

Foreign 13 8 ( 7 )

Foreign — — ( 1 )

$ 14 $ 7 $ ( 9 )

7 unchanged sentences

Tax loss carryforwards 495 441

Other 122 104

Deferred income tax assets 1,523 1,474

19 unchanged sentences

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

Increase for income tax positions of prior years — — 2

Increase for income tax positions of current year 1 — 2

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2038 199 17 —

2043 189 12 —

Indefinite 349 22 —

17 unchanged sentences

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.

3 unchanged sentences

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 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:

The following table summarizes the change in fair value of the 1.75% Debentures for the fiscal year ended February 28, 2023, February 28, 2022 and February 28, 2021 which also represents the total changes through earnings of items classified as Level 3 in the fair value hierarchy:

February 28, 2023

Balance as at Principal received as of September 1, 2020 $ 365

Balance as at February 28, 2021 $ 720

Change in fair value of the 1.75% Debentures ( 213 )

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

As at February 28, 2023 the $ 365 million principal value of the 1.75% Debentures is a current liability that will mature on November 13, 2023 .

Cash, cash equivalents, and investments were approximately $ 487 million as at February 28, 2023.

BlackBerry Limited

1 unchanged sentence

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

The Company has the ability to access other potential financing arrangements on commercially reasonable terms;

for disclosure of liquidity risk, see Note 13.

3.75% Convertible Debentures

5 unchanged sentences

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.

The following table shows the impact of the changes in fair value of the 3.75% Debentures for the years ended February 28, 2022, February 28, 2021 and February 29, 2020:

For the Years Ended

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

Income (charge) associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ — $ ( 19 ) $ 66

Income (charge) associated with the change in fair value from instrument-specific credit components recorded in AOCL — 15 ( 7 )

The following table shows the impact of the changes in fair value of the 3.75% Debentures for the year ended February 28, 2021:

February 28, 2021

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 )

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

Total decrease (increase) in the fair value of the 3.75% Debentures $ — $ ( 4 ) $ 59

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

CAPITAL STOCK

25 unchanged sentences

Stock-based compensation — 34

Common shares issued related to Exchange Shares 1,422 —

Common shares issued for employee share purchase plan 960 6

6 unchanged sentences

Stock options

The Company recorded a charge to income and a credit to paid-in capital of approximately $ 2 million in fiscal 2022 (fiscal 2021 - $ 6 million;

The Company recorded a charge to income and a credit to paid-in capital of approximately nil in fiscal 2023 (fiscal 2022 - $ 2 million;

fiscal 2021 - $ 6 million) in relation to stock option-based compensation expense.

27 unchanged sentences

Balance as at February 28, 2023 — $ —

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;

As at February 28, 2023, there was no unrecognized stock-based compensation expense related to unvested stock options.

The total fair value of stock options vested during the year ended February 28, 2023 was nominal (February 28, 2022 - $ 1 million;

February 28, 2021 - $ 6 million).

Cash received from the stock options exercised for the year ended February 28, 2022 amounted to $ 3 million (February 28, 2021 - $ 12 million;

Cash received from the stock options exercised for the year ended February 28, 2023 was nominal (February 28, 2022 - $ 3 million;

February 28, 2021 - $ 12 million).

29 unchanged sentences

February 28, 2021 - $ 44 million).

Inducement awards

In the first quarter of fiscal 2020, the Board approved an agreement to grant performance-based equity awards (“Inducement Awards”) to the co-founders of Cylance covering up to 4,182,189 common shares.

Up to 25 %, 35 % and 40 % of the Inducement Awards may be earned at the end of the Company’s 2020, 2021 and 2022 fiscal years, respectively, if certain performance conditions are met, and any earned amounts will vest at the end of fiscal 2022.

In fiscal 2020, 3,122,140 common shares subject to Inducement Awards were forfeited due to the departure of one of the co-founders of Cylance.

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

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.

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 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 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).

The contingent cash award will terminate on November 3, 2023 .

The Company recorded a reversal of compensation expense with respect to the contingent cash award of approximately $ 2 million for the year ended February 28, 2023 (February 28, 2022 - reversal of expense of $ 6 million;

February 28, 2021 - compensation expense of $ 8 million).

The liability recorded in respect to the award was nominal as at February 28, 2023 and is included within accrued liabilities (February 28, 2022 - $ 2 million).

Deferred share units

The Company issued 192,400 DSUs in the year ended February 28, 2022.

The Company issued 302,173 DSUs and redeemed 273,836 DSUs in the year ended February 28, 2023.

There were 1.6 million DSUs outstanding as at February 28, 2023 (February 28, 2022 - 1.6 million).

The Company had a liability of $ 6 million in relation to the DSU Plan as at February 28, 2023 (February 28, 2022 - $ 11 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

22 unchanged sentences

See Note 6 for details on the Debentures.

(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.

(3) The year ended February 28, 2021, included approximately 1,421,945 Exchange Shares 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 years ended February 28, 2023, February 28, 2022 and February 28, 2021 as to do so would be antidilutive.

5 unchanged sentences

February 28, 2023 February 28, 2022 February 28, 2021

Available-for-Sale Debt Securities

Balance, beginning of period $ — $ — $ 2

Other comprehensive loss before reclassification — — ( 2 )

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

Cash Flow Hedges

9 unchanged sentences

Balance, beginning of period $ ( 8 ) $ ( 9 ) $ ( 22 )

Other comprehensive income (loss) before reclassification 1 7 ( 8 )

Other comprehensive income before reclassification 2 1 7

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

3 unchanged sentences

Accumulated Other Comprehensive Loss, End of Period $ ( 24 ) $ ( 19 ) $ ( 13 )

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).

During the year ended February 28, 2023, $ 2 million in losses (pre-tax and post-tax) associated with cash flow hedges were reclassified from AOCL into selling, marketing and administration expenses (February 28, 2022 - $ 1 million in gains).

COMMITMENTS AND CONTINGENCIES

5 unchanged sentences

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

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.

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.

Litigation has been, and will likely continue to be, necessary to determine the scope, enforceability and validity of third-party proprietary rights or to establish the Company’s proprietary rights.

Regardless of whether claims

BlackBerry Limited

1 unchanged sentence

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.

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.

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.

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 probable or claims for which the amount of the loss cannot be reasonably estimated.

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

As of February 28, 2022, 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 February 28, 2023, 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.

13 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 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.

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

Notes to the Consolidated Financial Statements

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

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.

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

class actions reached an agreement in principle to settle;

see “Litigation Settlement” below in this Note 10.

On July 23, 2014, the plaintiff in the putative Ontario class action ( Swisscanto Fondsleitung AG v.

BlackBerry Limited, et al.

) filed a motion for class certification and for leave to pursue statutory misrepresentation claims.

On November 17, 2015, the Ontario Superior Court of Justice issued an order granting the plaintiffs’ motion for leave to file a statutory claim for misrepresentation.

On December 2, 2015, the Company filed a notice of motion seeking leave to appeal this ruling.

On January 22, 2016, the Court postponed the hearing on the plaintiffs’ certification motion to an undetermined date after asking the Company to file a motion to dismiss the claims of the U.S.

plaintiffs for forum non conveniens.

Before that motion was heard, the parties agreed to limit the class to purchasers who reside in Canada or purchased on the Toronto Stock Exchange.

On November 15, 2018, the Court denied the Company’s motion for leave to appeal the order granting the plaintiffs leave to file a statutory claim for misrepresentation.

1 unchanged sentence

Notice of class certification was published on March 6, 2019.

The Company filed its Statement of Defence on April 1, 2019, and discovery is proceeding.

On February 15, 2017, a putative employment class action was filed against the Company in the Ontario Superior Court of Justice.

The Company filed its Statement of Defence on April 1, 2019.

Discovery is proceeding and the Court has not set a trial date.

On March 17, 2017, a putative employment class action was filed against the Company in the Ontario Superior Court of Justice ( Parker v.

BlackBerry Limited ).

The Statement of Claim alleges that actions the Company took when certain of its employees decided to accept offers of employment from Ford Motor Company of Canada amounted to a wrongful termination of the employees’ employment with the Company.

The claim seeks (i) an unspecified quantum of statutory, contractual, or common law termination entitlements;

(ii) punitive or breach of duty of good faith damages of CAD$20,000,000, or such other amount as the Court finds appropriate, (iii) pre- and post- judgment interest, (iv) attorneys’ fees and costs, and (v) such other relief as the Court deems just.

(ii) punitive or breach of duty of good faith damages of CAD$20 million, or such other amount as the Court finds appropriate, (iii) pre- and post- judgment interest, (iv) attorneys’ fees and costs, and (v) such other relief as the Court deems just.

The Court granted the plaintiffs’ motion to certify the class action on May 27, 2019.

1 unchanged sentence

The Court denied the motion for leave to appeal on September 17, 2019.

The Company filed its Statement of Defence on December 19, 2019, and discovery is proceeding.

The Company filed its Statement of Defence on December 19, 2019.

The parties participated in a mediation on November 9, 2022, which did not result in an agreement.

Discovery is proceeding and the Court has not set a trial date.

Other contingencies

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.

As at February 28, 2023, 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

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

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.

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.

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

consolidated actions for $ 165 million.

The Stipulation of Settlement was executed effective June 7, 2022.

On June 14, 2022, the Court granted plaintiffs’ motion for preliminary approval of the settlement 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.

On June 29, 2022, the Company paid $ 1 million of the settlement amount.

The remaining $ 164 million was paid on September 6, 2022.

On September 29, 2022, the Court granted final approval of the settlement and entered final judgment.

(d) Indemnifications

2 unchanged sentences

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.

2 unchanged sentences

The Company has not encountered material costs as a result of such indemnifications in fiscal 2023.

See the Company’s Management Information Circular for its 2021 annual meeting of shareholders for additional information regarding the Company’s indemnification agreements with its current and former directors and executive officers.

The Company has operating and finance leases primarily for corporate offices, research and development facilities, data centers and certain equipment.

The Company’s leases have remaining lease terms of between one year and seven years , some of which may include options to extend the lease for up to 10 years, and some of which may include options to terminate the lease within three months .

The Company’s leases have remaining lease terms of between one year and five years , some of which may include options to extend the lease for up to 10 years, and some of which may include options to terminate the lease within one month .

The components of lease expense were as follows:

2 unchanged sentences

Operating lease cost, included in selling, marketing and administration $ 20 $ 23 $ 30

Finance lease cost

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

Total finance lease cost $ — $ 1 $ 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

Supplemental cash flow information related to leases was as follows:

1 unchanged sentence

February 28, 2023 February 28, 2022 February 28, 2021

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

Cash used in operating activities related to operating lease payments $ 32 $ 37 $ 37

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

During the year ended February 28, 2023, the Company entered into $ 15 million (February 28, 2022 - $ 6 million) in lease obligations and recognized a corresponding ROU asset of $ 15 million (February 28, 2022 - $ 6 million).

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

During the year ended February 28, 2023, the Company incurred losses of $ 4 million (February 28, 2022 - nil ;

February 28, 2021 - $ 37 million) on LLA impairment of ROU assets, as described in Note 3.

2 unchanged sentences

February 28, 2021 - $ 2 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

Supplemental consolidated balance sheet information related to leases was as follows:

7 unchanged sentences

Total operating lease liabilities $ 76 $ 94

Finance leases

Finance lease assets

Property, plant and equipment $ — $ 3

Accumulated amortization — ( 3 )

Total finance lease assets $ — $ —

February 28, 2023 February 28, 2022

3 unchanged sentences

Operating lease 3.4 % 3.4 %

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:

11 unchanged sentences

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.

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 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.

Fiscal 2021 information has been restated to conform to the current 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.

7 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

The following table shows information by operating segment for the fiscal year ended February 28, 2022 and February 28, 2021:

10 unchanged sentences

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 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, CylancePROTECT Mobile 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.

Other consists of the Company’s legacy SAF business, which ceased operations on January 4, 2022.

BlackBerry Limited

7 unchanged sentences

Stock compensation 3 4 5

Restructuring charges — — 5

Research & development 207 219 215

3 unchanged sentences

Impairment of goodwill 245 — 594

Gain on sale of property, plant and equipment, net ( 6 ) — —

Debentures fair value adjustment ( 138 ) ( 212 ) 372

Litigation settlement 165 — —

Investment income (loss), net ( 5 ) ( 21 ) 6

3 unchanged sentences

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”.

24 unchanged sentences

Decrease due to payment, fulfillment of performance obligations, or other ( 710 ) ( 630 ) ( 23 )

Decrease, net ( 50 ) ( 50 ) ( 5 )

Increase (decrease), net ( 18 ) ( 29 ) 1

Closing balance as at February 28, 2023 $ 120 $ 215 $ 17

32 unchanged sentences

February 28, 2021 - $ 24 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 ).

Selling, marketing and administration expenses for the fiscal year ended February 28, 2023 included nil with respect to foreign exchange gain, net of foreign exchange hedging (February 28, 2022 - $ 1 million;

February 28, 2021 - $ 1 million).

Foreign exchange

11 unchanged sentences

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

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 1.75% 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.

Consequently, the

BlackBerry Limited

1 unchanged sentence

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.

Consequently, the Company is exposed to interest rate risk as a result of the 1.75% Debentures.

Company is exposed to interest rate risk as a result of the 1.75% Debentures.

The Company does not currently utilize interest rate derivative instruments to hedge its investment portfolio or changes in the market value of the 1.75% Debentures.

1 unchanged sentence

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 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.

As at February 28, 2023, no single issuer represented more than 12 % 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 commercial paper 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 counterparties on a daily basis, subject to exposure and transfer thresholds.

As at February 28, 2023, the Company had $ 1 million in collateral held with counterparties (February 28, 2022 - nil in collateral held).

Liquidity risk

1 unchanged sentence

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.

The Company has experienced recent operating losses and the Debentures will mature on November 13, 2023 as described above in Note 6, but the Company maintains positive working capital, has the ability to access other potential financing arrangements on commercially reasonable terms, and has entered into the patent sale transaction as disclosed below in Note 14.

Taking these factors into account and based on its current financial projections, the Company believes its financial resources, together with expected future operating cash generating and operating expense reduction activities, 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

1 unchanged sentence

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 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.

5 unchanged sentences

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 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 year ended February 28, 2023, recorded $ 4 million in government subsidies as a reduction to operating expenses in the consolidated statement of operations (February 28, 2022 - $ 46 million).

As at February 28, 2023, the Company has recorded nil in accrued government subsidies within other receivables on the consolidated balance sheet (February 28, 2022 - $ 8 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

SUBSEQUENT EVENTS

BlackBerry will be entitled to receive annual cash royalties from the profits generated by the patents, on the following basis:

– 8 % of the first $ 500 million of profits

– 15 % of the next $ 250 million of profits

– 30 % of the next $ 250 million of profits;

– 50 % of all subsequent profits.

Completion of the transaction is conditional upon, among other things, satisfaction of all regulatory conditions under the Hart-Scott-Rodino Antitrust Improvements Act in the United States and the Investment Canada Act.

Pursuant to the patent sale agreement, the Company expects to receive a license back to the patents being sold, which relate primarily to mobile devices, messaging and wireless networking.

Patents that are essential to the Company’s current core business operations, as well as certain non-core patent families relating to mobile devices, are excluded from the transaction.

Contemporaneously, the Company also terminated a prior agreement with Catapult relating to the proposed sale of the patent portfolio subject to the Malikie agreement as well as certain additional non-core patents.

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