What changed in this filing

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Item 1. Financial Statements

2023-12-21 compared with 2023-09-29 · 188 added, 147 removed, 602 unchanged (36% of the section changed)

4 unchanged sentences

Consolidated Balance Sheets

August 31, 2023 February 28, 2023

November 30, 2023 February 28, 2023

Cash and cash equivalents (note 3) $ 210 $ 295

9 unchanged sentences

Property, plant and equipment, net (note 4) 22 25

Goodwill (note 3) 597 595

Intangible assets, net (note 4) 163 203

Goodwill (note 4) 597 595

$ 1,400 $ 1,679

20 unchanged sentences

On behalf of the Board:

Chen Lisa Disbrow

John Giamatteo Lisa Disbrow

Director Director

2 unchanged sentences

Consolidated Statements of Shareholders’ Equity

Three Months Ended August 31, 2023

Three Months Ended November 30, 2023

Capital Stock

2 unchanged sentences

Comprehensive Loss Total

Balance as at May 31, 2023 $ 2,920 $ ( 2,039 ) $ ( 22 ) $ 859

Balance as at August 31, 2023 $ 2,931 $ ( 2,081 ) $ ( 21 ) $ 829

Net loss — ( 21 ) — ( 21 )

1 unchanged sentence

Stock-based compensation 8 — — 8

Balance as at August 31, 2023 $ 2,931 $ ( 2,081 ) $ ( 21 ) $ 829

Three Months Ended August 31, 2022

Shares issued:

Employee share purchase plan 2 — — 2

Balance as at November 30, 2023 $ 2,941 $ ( 2,102 ) $ ( 14 ) $ 825

Three Months Ended November 30, 2022

Capital Stock

2 unchanged sentences

Comprehensive Loss Total

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

Balance as at August 31, 2022 $ 2,887 $ ( 1,529 ) $ ( 28 ) $ 1,330

Net loss — ( 4 ) — ( 4 )

Other comprehensive loss — — ( 8 ) ( 8 )

Other comprehensive income — — 2 2

Stock-based compensation 9 — — 9

Balance as at August 31, 2022 $ 2,887 $ ( 1,529 ) $ ( 28 ) $ 1,330

Shares issued:

Employee share purchase plan 2 — — 2

Balance as at November 30, 2022 $ 2,898 $ ( 1,533 ) $ ( 26 ) $ 1,339

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Shareholders’ Equity

Six Months Ended August 31, 2023

Nine Months Ended November 30, 2023

Capital Stock

8 unchanged sentences

Employee share purchase plan (note 7) 4 — — 4

Balance as at August 31, 2023 $ 2,931 $ ( 2,081 ) $ ( 21 ) $ 829

Six Months Ended August 31, 2022

Balance as at November 30, 2023 $ 2,941 $ ( 2,102 ) $ ( 14 ) $ 825

Nine Months Ended November 30, 2022

Capital Stock

8 unchanged sentences

Employee share purchase plan 6 — — 6

Balance as at August 31, 2022 $ 2,887 $ ( 1,529 ) $ ( 28 ) $ 1,330

Balance as at November 30, 2022 $ 2,898 $ ( 1,533 ) $ ( 26 ) $ 1,339

See notes to consolidated financial statements.

2 unchanged sentences

Consolidated Statements of Operations

Three Months Ended Six Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Revenue (note 11) $ 175 $ 169 $ 680 $ 505

22 unchanged sentences

Consolidated Statements of Comprehensive Loss

Three Months Ended Six Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Net loss $ ( 21 ) $ ( 4 ) $ ( 74 ) $ ( 239 )

Other comprehensive income (loss)

Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the period, net of income taxes of nil for the three and six months ended August 31, 2023 and August 31, 2022 (note 8) — ( 2 ) 1 ( 1 )

Net change in fair value and amounts reclassified to net loss from derivatives designated as cash flow hedges during the period, net of income taxes of nil for the three and nine months ended November 30, 2023 and November 30, 2022 (note 9) — — 1 ( 1 )

Foreign currency translation adjustment 1 1 3 ( 9 )

Net change in fair value from instrument-specific credit risk on the Debentures, net of income taxes of nil for the three and six months ended August 31, 2023 and August 31, 2022 (note 5) — — — 2

Net change in fair value from instrument-specific credit risk on the Debentures, net of income taxes of nil for the three and nine months ended November 30, 2023 and November 30, 2022 (note 6) 6 1 6 3

Other comprehensive income (loss) 7 2 10 ( 7 )

4 unchanged sentences

Consolidated Statements of Cash Flows

Six Months Ended

August 31, 2023 August 31, 2022

Nine Months Ended

November 30, 2023 November 30, 2022

Cash flows from operating activities

28 unchanged sentences

Issuance of common shares 4 6

Net cash provided by financing activities 2 3

Maturity of 2020 Debentures (note 6) ( 365 ) —

Issuance of Extension Debentures (note 6) 150 —

Net cash provided by (used in) financing activities ( 211 ) 6

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

Net increase in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period 121 52

Net decrease in cash, cash equivalents, restricted cash, and restricted cash equivalents during the period ( 87 ) ( 124 )

Cash, cash equivalents, restricted cash, and restricted cash equivalents, beginning of period 322 406

10 unchanged sentences

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

Operating results for the three and six months ended August 31, 2023 are not necessarily indicative of the results that may be expected for the full year ending February 29, 2024.

Operating results for the three and nine months ended November 30, 2023 are not necessarily indicative of the results that may be expected for the full year ending February 29, 2024.

The consolidated balance sheet at February 28, 2023 was derived from the audited Annual Financial Statements but does not contain all of the footnote disclosures from the Annual Financial Statements.

6 unchanged sentences

There have been no material changes to the Company’s accounting policies or critical accounting estimates from those described in the Annual Financial Statements other than those noted below.

Critical Accounting Estimates during the Six Months Ended August 31, 2023 (Note 10)

Critical Accounting Estimates during the Nine Months Ended November 30, 2023 (Note 11)

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

4 unchanged sentences

The Company has not adopted any new standards to date during fiscal 2024.

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED

In November 2023, the Financial Accounting Standards Board (the “FASB”) issued ASU 2023-07 on the topic of segment reporting.

The standard requires additional disclosures for segment reporting.

These requirements include:

(i) disclosure of significant expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of segment profit or loss (collectively referred to as the “significant expense principle”);

(ii) disclosure of an amount for other segment items (equal to the difference between segment revenue less segment expenses disclosed under the significant expense principle and each reported measure of segment profit or loss) by reportable segment and a description of their composition;

(iii) annual disclosure of a reportable segment’s profit or loss and assets currently required by Topic 280 in interim periods;

(iv) clarification that, if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources, a public entity may report those additional measures of segment profit or loss;

(v) disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources;

(vi) requiring a public entity that has a single reportable segment provide all the disclosures required by the amendments in this ASU, and all existing segment disclosures in Topic 280.

The guidance is effective for annual periods beginning after December 15, 2023 and interim periods within fiscal years beginning after December 15, 2024.

The Company will adopt this guidance in fiscal 2025 and is in the process of evaluating the new requirements.

As a result, the Company has not yet determined the impact this new ASU will have on its disclosures.

FAIR VALUE MEASUREMENTS, CASH, CASH EQUIVALENTS AND INVESTMENTS

3 unchanged sentences

• Level 1 - Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

• Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets;

10 unchanged sentences

When the Company concludes that there is a significant financing component included within a contract with a customer due to timing differences between the fulfillment of certain performance obligations and the receipt of payment for those performance obligations, the Company determines the present value of the future consideration utilizing the discount rate that would be reflected in a separate financing transaction between the customer and the Company at contract inception based upon the credit characteristics of the customer receiving financing in the contract.

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

For a description of how the fair value of the 2020 Debentures (as defined in Note 6) was determined, see the “Convertible debentures” accounting policies in Note 1 to the Annual Financial Statements.

The Debentures are classified as Level 3.

The Extension Debentures (as defined in Note 6) are classified as Level 2.

Non-Recurring Fair Value Measurements

4 unchanged sentences

Impairment of Long-Lived Assets

During the second quarter of fiscal 2024, the Company exited certain leased facilities.

The Company recorded a non-cash, pre-tax and after-tax impairment charge of $ 1 million related to the operating lease right-of-use (“ROU”) assets for those facilities (three and six months ended August 31, 2022 - $ 4 million).

During the three and nine months ended November 30, 2023, the Company exited certain leased facilities and recorded a pre-tax and after-tax impairment charge of $ 3 million and $ 3 million, respectively, related to the operating lease right-of-use (“ROU”) assets for those facilities (three and nine months ended November 30, 2022 - $ 4 million).

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

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.

These ROU impaired assets are classified within Level 3 of the fair value hierarchy.

The Company conducts regular reviews of the individual patents, both organically generated and acquired, comprising its patent portfolio.

As a result of this review, for the three and nine months ended November 30, 2023, the Company determined it has an indicator of impairment, as it had ceased enforcement and abandoned the legal right and title to patents with a cost of $ 15 million, accumulated amortization of $ 7 million, and a net book value of $ 8 million, which is classified as an impairment of long-lived assets on the Company’s consolidated statements of operations (three and nine months ended November 30, 2022 - nil impairment).

BlackBerry Limited

2 unchanged sentences

Cash, Cash Equivalents and Investments

The components of cash, cash equivalents and investments by fair value level as at August 31, 2023 were as follows:

The components of cash, cash equivalents and investments by fair value level as at November 30, 2023 were as follows:

Cost Basis (1)

14 unchanged sentences

treasury bills/notes 75 — — 75 71 — — 4

Corporate notes/bonds 5 — — 5 5 — — —

148 — — 148 123 — — 25

27 unchanged sentences

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

As at August 31, 2023, the Company had non-marketable equity investments without readily determinable fair value of $ 35 million (February 28, 2023 - $ 34 million).

As of August 31, 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, 2023 - $ 3 million).

There were no realized gains or losses on available-for-sale securities for the three and six months ended August 31, 2023 and August 31, 2022.

As at November 30, 2023, the Company had non-marketable equity investments without readily determinable fair value of $ 36 million (February 28, 2023 - $ 34 million).

As of November 30, 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, 2023 - $ 3 million).

There were no realized gains or losses on available-for-sale securities for the three and nine months ended November 30, 2023 and November 30, 2022.

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.

3 unchanged sentences

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

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at August 31, 2023 and February 28, 2023 from the consolidated balance sheets to the consolidated statements of cash flows:

August 31, 2023 February 28, 2023

The following table provides a reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents as at November 30, 2023 and February 28, 2023 from the consolidated balance sheets to the consolidated statements of cash flows:

November 30, 2023 February 28, 2023

Cash and cash equivalents $ 210 $ 295

4 unchanged sentences

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

The contractual maturities of available-for-sale investments as at August 31, 2023 and February 28, 2023 were as follows:

August 31, 2023 February 28, 2023

The contractual maturities of available-for-sale investments as at November 30, 2023 and February 28, 2023 were as follows:

November 30, 2023 February 28, 2023

Cost Basis Fair Value Cost Basis Fair Value

2 unchanged sentences

$ 158 $ 148 $ 374 $ 364

As at August 31, 2023 and February 28, 2023, the Company had no available-for-sale debt securities with continuous unrealized losses .

As at November 30, 2023 and February 28, 2023, the Company had no available-for-sale debt securities with continuous unrealized losses .

CONSOLIDATED BALANCE SHEET DETAILS

Accounts Receivable, Net of Allowance

The allowance for credit losses as at August 31, 2023 was $ 6 million (February 28, 2023 - $ 1 million).

The allowance for credit losses as at November 30, 2023 was $ 6 million (February 28, 2023 - $ 1 million).

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

12 unchanged sentences

Current period provision for expected credit losses 5

Ending balance of the allowance for credit loss as at August 31, 2023 $ 6

The allowance for credit losses as at August 31, 2023 consists of $ 2 million (February 28, 2023 - $ 1 million) relating to CECL estimated based on days past due and region and $ 4 million (February 28, 2023 - nil ) relating to specific customers that were evaluated separately.

There was one customer that comprised more than 10% of accounts receivable as at August 31, 2023 (February 28, 2023 - two customers comprised more than 10%).

Ending balance of the allowance for credit loss as at November 30, 2023 $ 6

The allowance for credit losses as at November 30, 2023 consists of $ 2 million (February 28, 2023 - $ 1 million) relating to CECL estimated based on days past due and region and $ 4 million (February 28, 2023 - nil ) relating to specific customers that were evaluated separately.

There were two customers that comprised more than 10% of accounts receivable as at November 30, 2023 (February 28, 2023 - two customers comprised more than 10%).

BlackBerry Limited

2 unchanged sentences

Other Receivables

As at August 31, 2023 and 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 November 30, 2023 and 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.

Other Current Assets

Other current assets comprised the following:

August 31, 2023 February 28, 2023

November 30, 2023 February 28, 2023

Intellectual property $ — $ 141

4 unchanged sentences

Property, plant and equipment comprised the following:

August 31, 2023 February 28, 2023

November 30, 2023 February 28, 2023

BlackBerry operations and other information technology $ 85 $ 84

9 unchanged sentences

Intangible assets comprised the following:

As at August 31, 2023

As at November 30, 2023

Cost Accumulated

11 unchanged sentences

$ 1,409 $ 1,206 $ 203

For the six months ended August 31, 2023, amortization expense related to intangible assets amounted to $ 26 million (six months ended August 31, 2022 - $ 50 million).

Total additions to intangible assets for the six months ended August 31, 2023 amounted to $ 10 million (six months ended August 31, 2022 - $ 16 million).

During the six months ended August 31, 2023, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

Based on the carrying value of the identified intangible assets as at August 31, 2023, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2024 and each of the five succeeding years is expected to be as follows:

For the nine months ended November 30, 2023, amortization expense related to intangible assets amounted to $ 38 million (nine months ended November 30, 2022 - $ 76 million).

Total additions to intangible assets for the nine months ended November 30, 2023 amounted to $ 12 million (nine months ended November 30, 2022 - $ 24 million).

During the nine months ended November 30, 2023, additions to intangible assets primarily consisted of payments for intellectual property relating to patent maintenance, registration and license fees.

Based on the carrying value of the identified intangible assets as at November 30, 2023, and assuming no subsequent impairment of the underlying assets, the annual amortization expense for the remainder of fiscal 2024 and each of the five succeeding years is expected to be as follows:

fiscal 2024 - $ 11 million;

6 unchanged sentences

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

Changes to the carrying amount of goodwill during the six months ended August 31, 2023 were as follows:

Changes to the carrying amount of goodwill during the nine months ended November 30, 2023 were as follows:

Carrying Amount

6 unchanged sentences

dollar denominated goodwill 2

Carrying amount as at August 31, 2023 $ 597

Carrying amount as at November 30, 2023 $ 597

Other Long-term Assets

As at August 31, 2023, other long-term assets included long-term receivables related to intellectual property sold, see Note 10 under the heading “Patent Sale”, long-term receivables, and the long-term portion of deferred commission, among other items, none of which were greater than 5% of the total assets balance.

As at November 30, 2023, other long-term assets included long-term receivables related to intellectual property sold, see Note 11 under the heading “Patent Sale”, long-term receivables, and the long-term portion of deferred commission, among other items, none of which were greater than 5% of the total assets balance.

As at February 28, 2023, other long-term assets included the long-term portion of deferred commission, among other items, none of which were greater than 5% of the total assets balance.

Accrued Liabilities

As at August 31, 2023 and February 28, 2023, other accrued liabilities included operating lease liabilities, current and accrued director fees, accrued vendor liabilities, variable incentive accrual, payroll withholding taxes and accrued royalties, among other items, none of which were greater than 5% of the current liabilities balance in any of the periods presented.

For the six months ended August 31, 2023, the Company’s net effective income tax expense rate was approximately 10 % compared to a net effective income tax expense rate of 4 % for the six months ended August 31, 2022.

As at November 30, 2023 and February 28, 2023, other accrued liabilities included operating lease liabilities, current and accrued director fees, accrued vendor liabilities, variable incentive accrual, payroll withholding taxes and accrued royalties, among other items, none of which were greater than 5% of the current liabilities balance in any of the periods presented.

For the nine months ended November 30, 2023, the Company’s net effective income tax expense rate was approximately 37 % compared to a net effective income tax expense rate of 5 % for the nine months ended November 30, 2022.

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

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

The Company’s total unrecognized income tax benefits as at August 31, 2023 were $ 21 million (February 28, 2023 - $ 21 million).

As at August 31, 2023, $ 21 million of the unrecognized income tax benefits have been netted against deferred income tax assets and nil has been recorded within income taxes payable on the Company’s consolidated balance sheets.

The Company’s total unrecognized income tax benefits as at November 30, 2023 were $ 21 million (February 28, 2023 - $ 21 million).

As at November 30, 2023, $ 21 million of the unrecognized income tax benefits have been netted against deferred income tax assets and nil has been recorded within income taxes payable on the Company’s consolidated balance sheets.

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

1 unchanged sentence

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

On September 1, 2020, Hamblin Watsa Investment Counsel Ltd., in its capacity as investment manager of Fairfax Financial Holdings Limited (“Fairfax”), and another institutional investor invested in the Company through a $ 365 million private placement of debentures (the “Debentures”).

The Debentures mature on November 13, 2023 .

Due to the conversion option and other embedded derivatives within the Debentures, the Company has elected to record the Debentures, including the debt itself and all embedded derivatives, at fair value and present the Debentures as a single hybrid financial instrument.

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

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

On November 17, 2023, the Company issued $ 150 million aggregate principal amount of 1.75% extendible convertible unsecured debentures (the “Extension Debentures”) in a private placement to certain controlled affiliates of Fairfax Financial Holdings Limited (“Fairfax”).

The Company used the net proceeds of the issuance of the Extension Debentures, together with cash on hand, to repay its outstanding $ 365 million aggregate principal amount of 1.75% unsecured convertible debentures (the “2020 Debentures” and, together with the Extension Debentures, the “Debentures”) at maturity on November 13, 2023 .

Aside from the maturity date, the terms of the Extension Debentures are substantially identical to those of the 2020 Debentures, except that the Extension Debentures will not be listed on any stock exchange and will not involve an indenture trustee.

The Extension Debentures are due on February 15, 2024 (the “Initial Maturity Date”), with an option for the parties to extend the maturity date to May 15, 2024 (the “Final Maturity Date” and, together with the Initial Maturity Date, each a “Maturity Date”) by mutual agreement.

Each $ 1,000 principal amount of Extension Debentures is convertible at any time prior to the third business day prior to the Maturity Date into 166.67 common shares of the Company, for a total of 25 million common shares at a price of $ 6.00 per share, subject to adjustments.

Covenants associated with the Extension Debentures include limitations on the Company’s total indebtedness.

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

Under specified events of default, the outstanding principal and any accrued interest on the Extension Debentures become immediately due and payable upon request of holders holding not less than 25 % of the principal amount of the Extension Debentures then outstanding.

During an event of default, the interest rate increases to 5.75 % per annum.

The Extension Debentures are subject to a change of control provision whereby the Company would be required to make an offer to repurchase the Extension Debentures at 115 % of par value if a person or group (not affiliated with Fairfax) acquires 35 % of the Company’s outstanding common shares, acquires all or substantially all of its assets, or if the Company merges with another entity and the Company’s existing shareholders hold less than 50 % of the common shares of the surviving entity.

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

Due to the conversion option and other embedded derivatives within the Extension Debentures, and consistent with the Company’s accounting for the 2020 Debentures, the Company has elected to record the Extension Debentures, including the debt itself and all embedded derivatives, at fair value and present the Extension Debentures as a single hybrid financial instrument.

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

Each period, the fair value of the 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 accumulated other comprehensive loss (“AOCL”).

The fair value of the

The fair value of the Extension Debentures has been determined using observable interest rate curves, the market price and volatility of the Company’s listed common shares.

BlackBerry Limited

1 unchanged sentence

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

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 Debentures at issuance.

The Company originally determined its credit spread by calibrating to observable trades of the previously-outstanding convertible debentures issued by the Company and trending the calibrated spread to valuation dates utilizing an appropriate credit index.

The Company’s credit spread was determined to be 7.90 % as of the issuance date of the Debentures and 7.21 % as of August 31, 2023.

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

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

The Company determined the implied discount on the Debentures by calculating the fair value of the 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 Debentures for the six months ended August 31, 2023, which also represents the total changes through earnings of items classified as Level 3 in the fair value hierarchy:

August 31, 2023

The following table summarizes the change in fair value of the 2020 Debentures for the nine months ended November 30, 2023, which also represents the total changes through earnings of items classified as Level 3 in the fair value hierarchy:

November 30, 2023

Balance as at February 28, 2023 $ 367

Change in fair value of the 2020 Debentures ( 2 )

Balance as at August 31, 2023 $ 383

The difference between the fair value of the Debentures and the unpaid principal balance of $ 365 million is $ 18 million.

The following table shows the impact of the changes in fair value of the Debentures for the three and six months ended August 31, 2023 and August 31, 2022:

Three Months Ended Six Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Income (charge) associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ 6 $ 10 $ ( 16 ) $ 56

Maturity of the 2020 Debentures on November 13, 2023 ( 365 )

Balance as at November 30, 2023 $ —

The following table summarizes the change in fair value of the Extension Debentures from their date of issuance, which also represents the total changes through earnings of items classified as Level 2 in the fair value hierarchy:

November 30, 2023

Principal received as of November 17, 2023 $ 150

Change in fair value of the Extension Debentures —

Balance as at November 30, 2023 $ 150

The difference between the fair value of the Extension Debentures and the unpaid principal balance of $ 150 million is nil .

The following table shows the impact of the changes in fair value of the Debentures for the three and nine months ended November 30, 2023 and November 30, 2022:

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Income associated with the change in fair value from non-credit components recorded in the consolidated statements of operations $ 18 $ 56 $ 2 $ 112

Income associated with the change in fair value from instrument-specific credit components recorded in AOCL — 1 — 3

Total decrease (increase) in the fair value of the Debentures $ 6 $ 10 $ ( 16 ) $ 58

For the three and six months ended August 31, 2023, the Company recorded interest expense related to the Debentures of $ 2 million and $ 3 million, respectively, which has been included in investment income (loss), net on the Company’s consolidated statements of operations (three and six months ended August 31, 2022 - $ 2 million and $ 3 million).

Realized losses associated with the change in fair value from credit components recorded in the consolidated statements of operations on maturity of the 2020 Debentures ( 6 ) — ( 6 ) —

Realized losses associated with the change in fair value from credit components released from AOCL on maturity of the 2020 Debentures 6 — 6 —

Total decrease in the fair value of the Debentures $ 18 $ 57 $ 2 $ 115

For the three and nine months ended November 30, 2023, the Company recorded interest expense related to the Debentures of $ 1 million and $ 5 million, respectively, which has been included in investment income (loss), net on the Company’s consolidated statements of operations (three and nine months ended November 30, 2022 - $ 2 million and $ 5 million).

Fairfax, a related party under U.S.

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

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

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

GAAP due to its beneficial ownership of common shares in the Company after taking into account potential conversion of the Extension Debentures, owned $ 330 million principal amount of the 2020 Debentures and now owns $ 150 million principal amount of the Extension Debentures.

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

BlackBerry Limited

2 unchanged sentences

CAPITAL STOCK

The following details the changes in issued and outstanding common shares for the six months ended August 31, 2023:

The following details the changes in issued and outstanding common shares for the nine months ended November 30, 2023:

Capital Stock and

6 unchanged sentences

Common shares issued for employee share purchase plan 1,037 4

Common shares outstanding as at August 31, 2023 583,684 $ 2,931

The Company had 584 million voting common shares outstanding, 0.4 million options to purchase voting common shares, 17 million RSUs and 2 million DSUs outstanding as at September 26, 2023.

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

Common shares outstanding as at November 30, 2023 585,340 $ 2,941

The Company had 585 million voting common shares outstanding, 0.3 million options to purchase voting common shares, 13 million RSUs and 2 million DSUs outstanding as at December 18, 2023.

In addition, 25 million common shares are issuable upon conversion in full of the Extension Debentures as described in Note 6.

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

LOSS PER SHARE

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

Three Months Ended Six Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Net loss for basic loss per share available to common shareholders $ ( 21 ) $ ( 4 ) $ ( 74 ) $ ( 239 )

8 unchanged sentences

49,469 60,833 — 60,833

Conversion of Extension Debentures (2) (4)

Weighted average number of shares and assumed conversions (000’s) diluted 638,470 639,781 583,559 638,551

3 unchanged sentences

______________________________

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

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

(1) The Company has presented the dilutive effect of the 2020 Debentures using the if-converted method for the period the 2020 Debentures were outstanding, assuming conversion at the beginning of the quarter for the three months ended November 30, 2023 and three and nine months ended November 30, 2022.

Accordingly, to calculate diluted loss per share, the Company adjusted net loss by eliminating the fair value adjustment made to the 2020 Debentures and interest expense incurred on the 2020 Debentures for the three months ended November 30, 2023 and three and nine months ended November 30, 2022, and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

See Note 6 for details on the 2020 Debentures.

(2) The Company has not presented the dilutive effect of the Debentures using the if-converted method in the calculation of diluted loss per share for the three and six months ended August 31, 2023, as to do so would be antidilutive.

(2) The Company has presented the dilutive effect of the Extension Debentures using the if-converted method for the period the Extension Debentures were outstanding, assuming conversion at the issuance date for the three months ended November 30, 2023.

Accordingly, to calculate diluted loss per share, the Company adjusted net loss by eliminating the fair value adjustment made to the Extension Debentures and interest expense incurred on the Extension Debentures for the three months ended November 30, 2023 and added the number of shares that would have been issued upon conversion to the diluted weighted average number of shares outstanding.

See Note 6 for details on the Extension Debentures.

(3) The Company has not presented the dilutive effect of the 2020 Debentures using the if-converted method in the calculation of diluted loss per share for the nine months ended November 30, 2023, as to do so would be antidilutive.

See Note 6 for details on the 2020 Debentures.

(3) The Company has not presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of diluted loss per share for the three and six months ended August 31, 2023 and August 31, 2022, as to do so would be antidilutive.

(4) The Company has not presented the dilutive effect of the Extension Debentures using the if-converted method in the calculation of diluted loss per share for the nine months ended November 30, 2023, as to do so would be antidilutive.

See Note 6 for details on the Extension Debentures.

(5) The Company has not presented the dilutive effect of in-the-money options and RSUs that will be settled upon vesting by the issuance of new common shares in the calculation of diluted loss per share for the three and nine months ended November 30, 2023 and November 30, 2022, as to do so would be antidilutive.

BlackBerry Limited

2 unchanged sentences

ACCUMULATED OTHER COMPREHENSIVE LOSS

The changes in AOCL by component net of tax, for the three and six months ended August 31, 2023 and August 31, 2022 were as follows:

Three Months Ended Six Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

The changes in AOCL by component net of tax, for the three and nine months ended November 30, 2023 and November 30, 2022 were as follows:

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Cash Flow Hedges

10 unchanged sentences

Other comprehensive income before reclassification — 1 — 3

Amounts reclassified from AOCL into net loss 6 — 6 —

Change in fair value from instruments-specific credit risk on Debentures

5 unchanged sentences

(a) Letters of Credit

The Company had $ 26 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business as of August 31, 2023.

The Company had $ 25 million in collateralized outstanding letters of credit in support of certain leasing arrangements entered into in the ordinary course of business as of November 30, 2023.

See the discussion of restricted cash in Note 3.

14 unchanged sentences

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

As of August 31, 2023, 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 November 30, 2023, there are no 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.

38 unchanged sentences

Other contingencies

In the first quarter of fiscal 2019, the Board approved a compensation package for the Company’s Executive Chair and CEO as an incentive to remain as Executive Chair until November 23, 2023.

As part of the package, the Company’s Executive Chair and CEO is entitled to receive a contingent performance-based cash award in the amount of $ 90 million that will become earned and payable should the volume weighted 10-day average trading price of the Company’s common shares on the New York Stock Exchange reach $ 30 before November 3, 2023 .

As the award is triggered by the

As at November 30, 2023, the Company has recognized $ 17 million (February 28, 2023 - $ 17 million) in funds from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX.

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

BlackBerry Limited

1 unchanged sentence

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

Company’s share price, it is considered stock-based compensation and accounted for as a share-based liability award.

As at August 31, 2023, the liability recorded in association with this award is nil (February 28, 2023 - nominal ).

As at August 31, 2023, the Company has recognized $ 17 million (February 28, 2023 - $ 17 million) in funds from claims filed with the Ministry of Innovation, Science and Economic Development Canada relating to its Strategic Innovation Fund program’s investment in BlackBerry QNX.

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

15 unchanged sentences

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

The management approach designates the internal reporting used by the Chief Operating Decision Maker (“CODM”) for making decisions and assessing performance as a source of the Company’s reportable operating segments.

The CODM, who is the Executive Chair and CEO of the Company, makes decisions and assesses the performance of the Company using three operating segments.

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.

The CODM, who is the Executive Chair and interim CEO of the Company, makes decisions and assesses the performance of the Company using three operating segments.

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

3 unchanged sentences

Cybersecurity, IoT, and Licensing and Other.

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

The following table shows information by operating segment for the three and six months ended August 31, 2023 and August 31, 2022:

The following table shows information by operating segment for the three and nine months ended November 30, 2023 and November 30, 2022:

For the Three Months Ended

Cybersecurity IoT Licensing and Other Segment Totals

August 31, August 31, August 31, August 31,

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

2023 2022 2023 2022 2023 2022 2023 2022

3 unchanged sentences

$ 77 $ 60 $ 46 $ 41 $ 5 $ 8 $ 128 $ 109

For the Six Months Ended

For the Nine Months Ended

Cybersecurity IoT Licensing and Other Segment Totals

August 31, August 31, August 31, August 31,

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

2023 2022 2023 2022 2023 2022 2023 2022

5 unchanged sentences

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

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

Cybersecurity consists of BlackBerry® UEM and Cylance® solutions (collectively BlackBerry Spark®), BlackBerry® AtHoc® and BlackBerry® SecuSUITE®.

6 unchanged sentences

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

BlackBerry Limited

Notes to the Consolidated Financial Statements

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

The following table reconciles total segment gross margin for the three and six months ended August 31, 2023 and August 31, 2022 to the Company’s consolidated totals:

Three Months Ended Six Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

The following table reconciles total segment gross margin for the three and nine months ended November 30, 2023 and November 30, 2022 to the Company’s consolidated totals:

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Total segment gross margin $ 128 $ 109 394 $ 321

17 unchanged sentences

In the first quarter of fiscal 2024, the Company recognized revenue of $ 218 million and cost of sales of $ 147 million related to intellectual property sold.

As at August 31, 2023, the remaining financing component on the patent sale was $ 13 million and will be recognized as interest income over the payment terms.

As at November 30, 2023, the remaining financing component on the patent sale was $ 12 million and will be recognized as interest income over the payment terms.

The Company estimated variable consideration from future royalty revenues using an expected value method including inputs from both internal and external sources related to patent monetization activities and cash flows, and constrained the recognition of that variable consideration based on the Company’s accounting policies and critical accounting estimates as described in Note 1.

The present value of variable consideration recognized as revenue was $ 23 million and the amount of variable consideration constrained was $ 210 million.

The Company evaluates its conclusions as to whether the constraints are still applicable on an ongoing basis, and will make updates when it observes a sufficient amount of evidence that amounts of variable consideration are no longer subject to constraint or the estimated amount of variable consideration has changed.

The present value of variable consideration recognized as revenue was $ 23 million and the amount of

BlackBerry Limited

1 unchanged sentence

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

variable consideration constrained was $ 210 million.

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

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

Three Months Ended Six Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

North America (1)

11 unchanged sentences

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

Three Months Ended Six Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Products and services transferred over time $ 80 $ 88 $ 245 $ 281

2 unchanged sentences

Revenue contract balances

The following table sets forth the activity in the Company’s revenue contract balances for the six months ended August 31, 2023:

The following table sets forth the activity in the Company’s revenue contract balances for the nine months ended November 30, 2023:

Accounts and Other Receivable Deferred Revenue Deferred Commissions

3 unchanged sentences

Increase (decrease), net 118 ( 13 ) 4

Closing balance as at August 31, 2023 $ 181 $ 195 $ 18

Closing balance as at November 30, 2023 $ 238 $ 202 $ 21

BlackBerry Limited

2 unchanged sentences

Transaction price allocated to the remaining performance obligations

The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at August 31, 2023 and the time frame in which the Company expects to recognize this revenue.

The table below discloses the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied as at November 30, 2023 and the time frame in which the Company expects to recognize this revenue.

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

The disclosure excludes estimates of variable consideration relating to future royalty revenues from the patent sale to Malikie, which have been constrained based on the Company’s accounting policies and critical accounting estimates as described in Note 1 and under “Patent Sale” in this Note 11.

As at August 31, 2023

As at November 30, 2023

Less than 12 Months 12 to 24 Months Thereafter Total

1 unchanged sentence

Revenue recognized for performance obligations satisfied in prior periods

For the three and six months ended August 31, 2023, $ 1 million and $ 31 million of revenue, respectively, was recognized relating to performance obligations satisfied in a prior period as a result of certain variable consideration no longer being subject to constraint (three and six months ended August 31, 2022 - $ 1 million).

For the three and nine months ended November 30, 2023, $ 1 million and $ 32 million of revenue, respectively, was recognized relating to performance obligations satisfied in a prior period as a result of certain variable consideration no longer being subject to constraint (three and nine months ended November 30, 2022 - nil and $ 1 million).

Property, plant and equipment, intangible assets, operating lease ROU assets and goodwill, classified by geographic region in which the Company’s assets are located, were as follows:

August 31, 2023 February 28, 2023

November 30, 2023 February 28, 2023

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

4 unchanged sentences

Information About Major Customers

There was no customer that comprised more than 10% of the Company’s revenue and one customer that comprised 45 % of the Company’s revenue in the three and six months ended August 31, 2023, respectively, due to the completed Malikie Transaction (three and six months ended August 31, 2022 - one customer that comprised 16 % and 15 % of the Company’s revenue, respectively ).

There was one customer that comprised 15 % of the Company’s revenue in the three months ended November 30, 2023 and one customer that comprised 33 % of the Company’s revenue in the nine months ended November 30, 2023 due to the completed Malikie Transaction (three and nine months ended November 30, 2022 - one customer that comprised 11 % and 14 % of the Company’s revenue, respectively ).

BlackBerry Limited

3 unchanged sentences

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

Three Months Ended Six Months Ended

August 31, 2023 August 31, 2022 August 31, 2023 August 31, 2022

Three Months Ended Nine Months Ended

November 30, 2023 November 30, 2022 November 30, 2023 November 30, 2022

Interest paid during the period $ 1 $ 2 $ 5 $ 5

4 unchanged sentences

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

The majority of the Company’s revenue in the second quarter of fiscal 2024 was transacted in U.S.

The majority of the Company’s revenue in the third quarter of fiscal 2024 was transacted in U.S.

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

1 unchanged sentence

dollars, euros and British pounds.

At August 31, 2023, approximately 22 % of cash and cash equivalents, 38 % of accounts receivable and 49 % of accounts payable were denominated in foreign currencies (February 28, 2023 – 19 %, 24 % and 36 %, respectively).

At November 30, 2023, approximately 13 % of cash and cash equivalents, 36 % of accounts receivable and 48 % of accounts payable were denominated in foreign currencies (February 28, 2023 – 19 %, 24 % and 36 %, respectively).

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

3 unchanged sentences

Cash and cash equivalents and investments are invested in certain instruments of varying maturities.

Consequently, the Company is exposed to interest rate risk as a result of holding investments of varying maturities.

Consequently, the Company is exposed to interest rate risk as a result of holding investments of varying maturities and the significant financing components within certain revenue contracts with customers.

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 also has significant financing components within certain revenue contracts with customers and is exposed to interest rate risk as a result of discounting the future payments from customers with a fixed interest rate.

The Company has also issued Debentures with a fixed interest rate, as described in Note 6.

3 unchanged sentences

The Company is exposed to market and credit risk on its investment portfolio.

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 August 31, 2023, no single issuer represented more than 16 % of the total cash, cash equivalents and investments (February 28, 2023 - no single issuer represented more than 12 % of the total cash, cash equivalents and investments), with the largest such issuer representing bearer deposits, term deposits and cash balances with one of the Company’s banking counterparties.

The Company is also exposed to credit risk with customers, as described in Note 4.

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

As at November 30, 2023, no single issuer represented more than 35 % of the total cash, cash equivalents and investments (February 28, 2023 - no single issuer represented more than 12 % of the total cash, cash equivalents and investments), with the largest such issuer representing bearer deposits, term deposits and cash balances with 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 August 31, 2023, the Company had no collateral posted or held with counterparties (February 28, 2023 - $ 1 million in collateral held).

As at November 30, 2023, the Company had no collateral posted or held with counterparties (February 28, 2023 - $ 1 million in collateral held).

BlackBerry Limited

2 unchanged sentences

Liquidity risk

Cash, cash equivalents, and investments were approximately $ 519 million as at August 31, 2023.

Cash, cash equivalents, and investments were approximately $ 271 million as at November 30, 2023.

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

The Company has experienced recent operating losses and the Debentures will mature on November 13, 2023 as described above in Note 5, but the Company has the ability to access other potential financing arrangements on commercially reasonable terms.

The Company has experienced recent operating losses and the Extension Debentures will mature on February 15, 2024 , with an option for the parties to extend the maturity date to May 15, 2024 , by mutual agreement, as described above in Note 6, but the Company has the ability to access other potential financing arrangements on commercially reasonable terms.

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 and access to other potential financing arrangements, are expected to 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.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements