EX-1.1 2 bbry-02282017x40fexhibit11.htm EXHIBIT 1.1 - ANNUAL INFORMATION FORM Exhibit



BLACKBERRY LIMITED
2200 University Avenue East
Waterloo, Ontario
Canada
N2K 0A7
Annual Information Form
For the fiscal year ended
February 28, 2017
DATE: March 31, 2017




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TABLE OF CONTENTS
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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ANNUAL INFORMATION FORM
CERTAIN INTERPRETATION MATTERS
Unless the context otherwise requires, all references to the “Company” and “BlackBerry” include BlackBerry Limited (formerly, Research In Motion Limited) and its subsidiaries. All dollar references, unless otherwise noted, are in United States dollars.
BlackBerry®, BBM™, QNX®, Good® and related trademarks, names and logos are the property of BlackBerry Limited and are registered and/or used in the United States and countries around the world. All other trademarks are the property of their respective owners.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Information Form (“AIF”) contains forward-looking statements within the meaning of certain securities laws, including under the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws, including statements relating to:
•
the Company’s plans, strategies and objectives, including the anticipated benefits of its strategic initiatives described below, and the anticipated opportunities and challenges for the Company;
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the Company’s expectations regarding anticipated demand for, and the timing of, new product and service offerings, and the Company’s plans and expectations relating to its existing and new product and service offerings, including BlackBerry Secure, BlackBerry-branded smartphones, the BlackBerry Messenger Enterprise Software Development Kit (“SDK”), BlackBerry Radar and the cloud-based BlackBerry Internet of Things platform (the “BlackBerry IoT Platform”), including software products offered by the Company’s wholly-owned subsidiary, QNX Software Systems Limited (“BlackBerry QNX”); and
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the Company’s expectations regarding the generation of revenue from its software, services and other technologies, including subscription-based licensing, as well as its expectations regarding the ability of such revenues to offset declining service access fees.
The words “expect”, “anticipate”, “estimate”, “may”, “will”, “should”, “could”, “intend”, “believe”, “target”, “plan” and similar expressions are intended to identify forward-looking statements. Forward-looking statements are based on estimates and assumptions made by the Company in light of its experience and its perception of historical trends, current conditions and expected future developments, as well as other factors that the Company believes are appropriate in the circumstances, including but not limited to, the Company’s expectations regarding its business, strategy, opportunities and prospects, including its ability to implement meaningful changes to address its business challenges, the launch of new products and services, general economic conditions, product pricing levels and competitive intensity, and the Company’s expectations regarding the cash flow generation of its business and the sufficiency of its financial resources. Many factors could cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by the forward-looking statements, including, without limitation, the risks and uncertainties facing the Company which are described in the “Risk Factors” section of this AIF.
Any statements that are forward-looking statements are intended to enable the Company’s shareholders to view the anticipated performance and prospects of the Company from management’s perspective at the time such statements are made, and they are subject to the risks that are inherent in all forward-looking statements, as described above. These forward-looking statements are made by the Company in light of its experience, its perception of historical and anticipated business trends, existing conditions in the business at the time and anticipated future developments, including competition and new product initiatives and expected timing, as well as the Company’s current assessments of the risk factors that affect its business, including those identified in this AIF, and the likely success of mitigation strategies relating to such factors. These forward-looking statements are subject to the inherent risk of difficulties in forecasting the Company’s financial results and performance for future periods, particularly over longer periods, given the ongoing transition in the Company’s business strategy and the rapid technological changes, evolving industry standards, intense competition and short product life cycles that characterize the industries in which the Company operates. These difficulties in forecasting the Company’s financial results and performance are magnified at the present time given the uncertainties related to the strategic initiatives described in this AIF. These factors should be considered carefully, and readers should not place undue reliance on the Company’s forward-looking statements. The Company has no intention and undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

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CORPORATE STRUCTURE
The Company
The Company was incorporated under the Business Corporations Act (Ontario) (“OBCA”) on March 7, 1984 and commenced operations at that time. The Company has amalgamated with several of its wholly-owned subsidiaries, the last amalgamation occurring through the filing of articles of amalgamation under the OBCA on November 4, 2013. The Company’s registered and principal business office is 2200 University Avenue East, Waterloo, Ontario, Canada N2K 0A7.
Inter-corporate Relationships
The Company has four material subsidiaries, all of which are wholly-owned, directly or indirectly, by the Company in each case as at February 28, 2017.
Name of Subsidiary
Jurisdiction of Incorporation or Organization
BlackBerry Corporation
Delaware, U.S.A.
BlackBerry UK Limited
England and Wales
Good Technology Corporation
Delaware, U.S.A.
QNX Software Systems Limited
Ontario, Canada
GENERAL DEVELOPMENT OF THE BUSINESS
The products, services and developments that have influenced the Company’s business over the last three fiscal years are as follows:
Fiscal 2017:
Products, Services and Certifications
•
Launched BlackBerry Secure, a comprehensive and fully integrated mobility security platform to connect people devices, processes, systems and organizations for the Enterprise of Things;
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Partnered with TCL Communication (“TCL”) in its introduction of the BlackBerry-branded KEYone smartphone, offering the most secure Android smartphone experience with availability beginning in the first quarter of fiscal 2018;
•
Launched DTEK60 and DTEK50 secure Android smartphones;
•
Launched BlackBerry Radar, a new end-to-end asset tracking system for trucking companies and private fleet operators to optimize asset utilization, reduce theft and reduce operational costs;
•
Announced plans to launch the BlackBerry Autonomous Vehicle Innovation Center (“AVIC”) to focus on developing secure software for connected cars and autonomous driving, while launching under BlackBerry QNX the Secure Embedded Software Platform for autonomous drive and connected cars;
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Introduced the new Enterprise Partner Program to stimulate growth and drive profit for solutions providers, developers and training partners working with BlackBerry solutions;
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Achieved common criteria National Information Assurance Partnership (“NIAP”) certification for BB 10.3.3;
•
Announced plans to launch a Federal Cybersecurity Operations Center to support FedRAMP and other government security certification initiatives, led by former U.S. Coast Guard CIO, Rear Admiral Bob Day Jr. (retired); and
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Entered the Communications Platform as a Service (CPaaS) market with the launch of the BlackBerry Messenger (“BBM”) Enterprise SDK, which will enable developers to integrate secure messaging, voice and video capabilities into applications and services.

Joint Ventures, Partnerships and Other Agreements
•
Entered into agreements with TCL, Optiemus Infracom Ltd. (“Optiemus”) and PT BB Merah Putih under which the Company has licensed its security software and service suite, as well as related brand assets, to these licensees who will design, manufacture, sell and provide customer support for BlackBerry-branded handsets featuring the Company’s secure Android software;
•
Entered into a strategic alliance and licensing agreement with PT Elang Mahkota Teknologi Tbk (“Emtek”) to provide cross-platform consumer BBM users with access to enriched content and services; and
•
Entered into a non-exclusive agreement with Ford Motor Company for expanded use of the BlackBerry QNX OS, hypervisor and audio processing software as well as Certicom and security software.


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Financial Highlights
•
Reduced leverage through the redemption of the Company’s outstanding 6% convertible debentures (the “6% Debentures”) through the issuance of $605 million aggregate principal amount of 3.75% convertible debentures of the Company (the “3.75% Debentures”) (the “Debenture Refinancing”);
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Completed a normal course issuer bid under which the Company repurchased for cancellation approximately 12.6 million common shares;
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Achieved positive adjusted EBITDA in each quarter of fiscal 2017; and
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Achieved non-GAAP total Company software and services revenues of $687 million for the year, and U.S. GAAP total Company software and services revenues of $622 million for the year.

Executive Officer Appointment
•
Appointed Steven Capelli as Chief Financial Officer.
Fiscal 2016:
Acquisitions
•
Acquired all of the issued and outstanding shares of Good Technology Corporation (“Good”), a provider of secure mobility solutions, including secure applications and containerization that protects end user privacy, in a significant acquisition for aggregate consideration of approximately $417 million;
•
Acquired AtHoc, Inc. (“AtHoc”), a provider of secure, networked crisis communications;
•
Acquired WatchDox Ltd. (“WatchDox”), a data security company offering secure enterprise file synchronization and sharing (“EFSS”) solutions; and
•
Acquired Encription Holdings Limited and Encription Ireland Limited (“Encription”), a cybersecurity consulting firm providing industry-leading assessments in penetration testing and security training services.

Products, Services and Approvals
•
Launched the PRIV smartphone, running on the Android™ operating system;
•
Announced the Good Secure EMM Suites by BlackBerry, a comprehensive set of mobile security, management, productivity and collaboration offerings;
•
Announced the launch of a Professional Cybersecurity Services practice;
•
Announced voice encryption solution SecuSUITE for Enterprise;
•
Announced BES12 Cloud, a cloud-based, cross-platform enterprise mobility management (“EMM”) solution;
•
Obtained the approval of the United States Department of Defense (“DoD”) for the use of Public Key Infrastructure credentials on BlackBerry OS and BlackBerry 10 smartphones;
•
Unveiled a new QNX software platform for Advanced Driver Assistance Systems (“ADAS”) to enable automakers to build autonomous drive features; and
•
Showcased at the Consumer Electronics Show an IoT over-the-air software platform, as well as the development version of BlackBerry Radar.

Joint Ventures, Partnerships and Other Agreements
•
Entered into a long-term patent cross-licensing agreement with Cisco;
•
Entered into a joint development and manufacturing agreement with Wistron Corporation;
•
Announced the planned integration of Samsung KNOX™ with WorkLife by BlackBerry and SecuSUITE; and
•
Announced the availability of the Company’s multi-OS EMM platform in the Microsoft Azure Marketplace.

Financial Highlights
•
Achieved positive free cash flow and positive adjusted EBITDA in each quarter of fiscal 2016;
•
Achieved non-GAAP revenue of $527 million from software and services for the year, and U.S. GAAP software and services revenue of $494 million for the year;
•
Commenced a normal course issuer bid to purchase up to 27 million common shares of the Company; and
•
Commenced the resource alignment program (the “Resource Alignment Program”) with the objectives of reallocating Company resources to capitalize on growth opportunities and reaching sustainable profitability.

Director and Executive Officer Appointments
•
Appointed the Honourable Wayne G. Wouters, PC, an executive leader in government relations, strategic leadership, international trade and economic policy, to the board of directors of the Company (the “Board”);
•
Appointed Laurie Smaldone Alsup, M.D., an executive leader in drug development, regulatory strategy, and regulatory approvals in the pharmaceutical and biotechnology industries, to the Board; and
•
Appointed Carl Wiese as President of Global Sales.

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Fiscal 2015:
Acquisitions
•
Acquired Secusmart GmbH (“Secusmart”), a leader in high-security voice and data encryption and anti-eavesdropping solutions; and
•
Acquired Movirtu Limited (“Movirtu”), a provider of virtual identity solutions for mobile operators.

Products, Services and Approvals
•
Launched BES12, a cross-platform EMM solution by BlackBerry;
•
Launched four new BlackBerry 10 smartphones, including the Classic, Passport, Z3 and the Porsche Design P’9983;
•
Unveiled the BlackBerry IoT Platform, initially targeting the automotive and asset tracking industries, by combining technology from QNX, with the Company’s secure network infrastructure and device lifecycle management software;
•
Announced new value-added enterprise solutions, including BlackBerry Blend, WorkLife by BlackBerry, Enterprise Identity by BlackBerry and VPN Authentication by BlackBerry;
•
Launched BBM Protected;
•
Launched a substantial software update for BlackBerry 10 smartphones (version 10.3.1);
•
Announced that BES10 and BES12 would be available as a hosted service through third-party partners worldwide;
•
Received Security Technical Implementation Guide approval from the U.S. Defense Information Systems Agency for Secure Work Space for iOS® and Android; and
•
Provided for mobile device management companies to directly manage devices with the BlackBerry 10 operating system.

Joint Ventures, Partnerships and Other Agreements
•
Announced a partnership with Amazon.com Inc. making approximately 240,000 Android applications available to BlackBerry users through the Amazon Appstore;
•
Announced that the Company is working with Google Inc. (“Google”) to enable BES12 to manage devices equipped with Android for Work™;
•
Announced a strategic partnership with Samsung Electronics Co., Ltd. (“Samsung”) to provide an end-to-end secure solution that brings together BES12 with Samsung KNOX; and
•
Announced an investment in healthcare information technology leader NantHealth LLC.

Financial Highlights
•
Achieved break-even cash flow in the third quarter of fiscal 2015, one quarter sooner than anticipated;
•
Completed the divestiture of the majority of the Company’s real estate holdings in Canada; and
•
Completed the Cost Optimization and Resource Efficiency program in the fourth quarter of fiscal 2015.

Director and Executive Officer Appointments
•
Appointed Mike Daniels, a leading expert in cyber security with extensive experience in the U.S. government and the private sector, to the Board; and
•
Appointed Dr. Sandeep Chennakeshu as President of the BlackBerry Technology Solutions (“BTS”) unit, Marty Beard as Chief Operating Officer; Nita White-Ivy as Executive Vice President, Human Resources and Billy Ho as Executive Vice President, Enterprise Products and Value Added Solutions.
NARRATIVE DESCRIPTION OF THE BUSINESS
Overview
The Company is a mobile-native security software and services company dedicated to securing the Enterprise of Things. Based in Waterloo, Ontario, the Company was founded in 1984 and operates in North America, Europe, Asia, the Middle East, Latin America and Africa. The Company trades under the ticker symbols “BB” on the Toronto Stock Exchange (“TSX”) and “BBRY” on the NASDAQ Global Select Market.
The Mobile Communications Industry
Improvements in wireless network infrastructure and the rapid proliferation of mobile devices and applications in recent years are transforming the way that enterprises and individuals communicate and collaborate. In the enterprise, the mobile platform is becoming the primary computing platform and users now expect to be as productive on their mobile devices as they are on their desktop and laptop computers, with secure, reliable access to their data, applications and services. Enterprises are increasingly embracing mobility strategies by deploying devices internally and by enabling mobile-first interactions with

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external business partners and customers. In implementing these mobility strategies, organizations demand solutions that deliver a rich, flexible user experience without compromising on centralized management or enterprise-grade security.
Security is increasingly important in the mobile environment, with cybercriminals developing ever more sophisticated methods of gaining access to sensitive intellectual property and personal information. Recent data breaches have exposed the potential for hacking to cause significant financial and reputational damage and even to threaten national security. Enterprises, and governments in particular, require hardware and software that can protect their data, ensure privacy and demonstrate compliance with applicable security regulations.
From a hardware perspective, the enterprise market for smartphones has become increasingly characterized by a combination of enterprise-deployed devices and devices that are purchased by consumers and also used in the enterprise environment, commonly referred to as the Bring Your Own Device or BYOD model. These consumer devices are supported in the enterprise environment by information technology (“IT”) departments for access to corporate messaging and applications. As the market has evolved, IT departments now look for enterprise mobility solutions that can handle a variety of devices including laptops and a range of deployment models.
From a software perspective, EMM software solutions designed for centralized administration by enterprise IT departments typically include on-premise software products or cloud-based services that are deployed in conjunction with corporate messaging and application services. These products are used to manage and secure both company-issued and personally-owned devices within the enterprise environment. As this market continues to mature, these solutions have expanded beyond device management to include enhanced mobile enterprise applications focused on content security and protecting user privacy.
Recently, the Internet of Things (“IoT”) has also emerged as a driving force for the expansion of new wireless applications, with many mobile communications industry participants establishing relationships, practices and partnerships focused around communication between devices. As the IoT continues to develop, companies enabling these connected devices will be faced with many of the same challenges faced by enterprises enabling smartphones in their workplaces. As the scope of devices to be managed in the IoT continues to expand, the EMM market category is evolving towards unified endpoint management (“UEM”).
Information sharing software to support more efficient and secure enterprise collaboration is a growing area of investment and innovation closely associated with the mobile communications market. Enterprise document collaboration is increasingly moving to EFSS based solutions that can address the challenges of shared document security, manageability, tracking and compliance among multiple users in the enterprise. Crisis communications systems have also emerged with solutions that improve the content, accuracy and timeliness of information flows during times of crisis by leveraging mobile and social communication networks to enable the bidirectional collection and sharing of data.
Strategy
BlackBerry products and services are widely recognized for productivity and security, and the Company believes that it delivers the most secure end-to-end mobile enterprise solutions in the market.  With these core strengths, the Company’s broad portfolio of products and services is focused on serving enterprise customers, particularly in regulated industries.
The Company has been executing a strategy to leverage its strengths in mobility management and security to focus its business on software and services that secure, manage and connect the Enterprise of Things. The Company defines the Enterprise of Things as the network of devices, computers, sensors, equipment and other connected endpoints within the enterprise that communicate with each other to enable smart product development, distribution, marketing and sales. The Company leverages many elements of its extensive technology portfolio to extend best-in-class security and reliability to its solutions for the Enterprise of Things, including UEM, embedded systems, crisis communications, enterprise applications, and related services, with hosting available on the Company’s global, scalable, secure network.
The Company intends to continue to increase and enhance its product and service offerings through strategic acquisitions and targeted growth in internal investments. The Company’s goal is to maintain its market leadership in the enterprise mobility segment by continuing to extend the functionality of the BlackBerry Secure platform and, on top of this extensive foundation, deliver UEM solutions focused on strategic industry verticals.
The following five strategic pillars support the Company as it pursues its new software-focused strategy:
•
Product Platform. The Company’s new software platform, BlackBerry Secure, is a comprehensive mobile-native approach to security that addresses the entire enterprise from endpoint to endpoint. It is both a product platform and a standard of security. Enterprises can become BlackBerry Secure by leveraging the Company’s solutions, which are informed by deep mobile security expertise and experience, continuous technical innovation, industry partnerships and academic collaborations, on-demand cyber-security expert services, and a point of view that recognizes vulnerability wherever it lies.

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Substantial Target Markets. The Company leverages its expertise in mobility and security to capitalize on opportunities in the cybersecurity, transportation, healthcare, financial services and government markets. BlackBerry intends to provide enterprises and governments with the highest standard of security, enabling them to be BlackBerry Secure.
•
Efficient Go-To-Market. The Company’s licensing, developer, partner, and sales strategy is now that of an enterprise software company. The Company licenses its brand and secure handset software and applications to select third-party manufacturers and others seeking the Company’s software expertise. The Company is also building developer and channel partner programs for BlackBerry Secure to promote the growth of an enterprise endpoint security ecosystem and to bolster the Company’s direct sales and marketing efforts. See also “Sales, Marketing, Distribution and Customers”.
•
Operational Efficiency. The Company is reconfiguring its operations to support its enterprise software focus with greater efficiency and speed in bringing new offerings to market, including by adjusting its R&D emphasis, reporting lines and administrative capabilities.
•
Growth and Profitability. The Company intends to drive revenue growth through its software and services portfolio and to achieve margins that are consistent with those of other enterprise software companies.
Operating Segments
The Company is organized and managed as three operating segments: Software & Services, Mobility Solutions, and Service Access Fees (“SAF”).
Software & Services
The Software & Services segment consists of operations relating to the Company’s software products and service offerings, including:
Enterprise Software and Services
Security, reliability, productivity and collaboration are hallmark strengths of the Company’s enterprise software offerings and are instrumental to the Company’s success in the enterprise market.
With the acquisitions of Good and Watchdox in fiscal 2016, the Company expanded its ability to offer a unified, secure mobility platform with applications and services for any mobile device on any operating system, supported by security that has been certified by governments around the world and is embedded in every component of the mobility infrastructure. In fiscal 2017, the Company launched BlackBerry Secure, integrating BlackBerry UEM (formerly BES12) with BlackBerry Dynamics (formerly Good Dynamics) and other key acquired technologies such as BlackBerry Workspaces (formerly the WatchDox solution). BlackBerry Secure is the foundation of the Company’s software strategy and combines mobile security, management, productivity and collaboration solutions in one platform with best-in-class application security and containerization, identity and access management, and EFSS with file level data protection.
BlackBerry UEM offers a “single pane of glass”, or unified console view, for managing and securing devices, applications, identity, content, and IoT endpoints. BlackBerry UEM continues to be the core of the Company’s enterprise software offerings, and supports all of the major operating systems and device ownership models employed in the enterprise. BlackBerry Dynamics offers a best-in-class secure development platform and container for mobile applications, including the Company’s own enterprise applications such as BlackBerry Work and BlackBerry Connect for secure collaboration. BlackBerry Workspaces embeds digital rights management protection in shared files, giving organizations full visibility and control over how files are accessed, edited, copied, printed or forwarded across mobile and desktop devices.
The Company intends to maintain and strengthen its position as a leader in UEM and mobile security by continuing to expand its enterprise software portfolio through the internal development and acquisition of technologies focused on identity management, authentication and other value-added security and productivity solutions.
BlackBerry Technology Solutions
The BTS business comprises five units: BlackBerry QNX, Certicom, Paratek, BlackBerry Radar, and Intellectual Property and Licensing (“IP&L”). The BTS unit was created to position the Company’s technology licensing businesses together under one leadership umbrella with a view to creating new revenue streams and enhancing value from the Company’s technology.
The largest BTS business unit is BlackBerry QNX. BlackBerry QNX is a global provider of operating systems, middleware, development tools, and professional services for connected embedded systems, primarily in the automotive, medical and industrial automation markets. BlackBerry QNX is the recognized leader in software for automotive electronics, with products deployed in digital instrument clusters and in the infotainment and telematics systems of more than 60 million vehicles. Over 40 automotive original equipment manufacturers (“OEMs”) use BlackBerry QNX technology in major car brands around the

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world. With its field-proven technology and suite of safety certifications, BlackBerry QNX is also a preferred supplier for companies building medical devices, train-control systems, industrial robots, hardware security modules, building automation systems, green energy solutions, and other mission-critical and safety-critical applications.
BlackBerry QNX continues to attract new business through a growing portfolio of innovative products, including the following solutions announced during fiscal 2017:
•
The QNX Software Development Platform 7.0: the most advanced and secure embedded software platform for autonomous drive and connected cars, powered by the next-generation 64-bit Neutrino® real-time operating system and built on existing safety certifications;
•
The QNX SDK for Bluetooth Connectivity: a reliable and flexible software offering compliant with the Bluetooth Core Specification version 4.2 that can be enabled for interoperability with a variety of personal health devices; and
•
The QNX Platform for Instrument Clusters: a platform upon which customers can build advanced digital instrument cluster solutions that offer a superior user experience while satisfying stringent safety requirements.
BlackBerry QNX also recently demonstrated automotive hypervisor software that manages safety-critical and non-safety-critical systems running on a single silicon chip in real-time, and is jointly developing a platform for advanced driver assistance systems and automated driving. In fiscal 2017, BlackBerry QNX announced the AVIC to advance technology innovation for connected and autonomous vehicles, independently as well as in collaboration with private and public sector organizations and research institutes.
Certicom specializes in applied elliptical curve-based cryptography, managed public key infrastructure and key management, offering both software components and end-to-end security solutions targeted at bandwidth and resource-constrained applications. Certicom’s asset management technology is deployed in over 400 million high value ASICs (application specific integrated circuit customized for a particular use) and its certificates are used in over 100 million IoT devices. During fiscal 2016, Certicom launched the Certicom Managed Certificate Service, which is designed to help device manufacturers and service providers secure their IoT networks and ecosystems, ensuring that the devices they connect are known and trusted.
Paratek designs, develops and licenses its adaptive radio frequency (“RF”) antenna tuning technology. With the growth of RF bands to be covered, increasingly stringent performance requirements and the advent of carrier aggregation, RF antenna tuning is becoming a key differentiator to improve the antenna performance of smartphones. Paratek technology has been adopted by numerous OEMs and had numerous handset design wins.
The BTS business is also developing applications for the BlackBerry IoT Platform. The Company’s initial focus is on asset tracking for the transportation and logistics industry, including through the BlackBerry Radar device and web-based applications for tracking trailers, chassis, and containers, for reporting locations and sensor data, and for enabling custom alerts and fleet management analytics. The BlackBerry IoT Platform also provides the backbone for the cloud-based BlackBerry secure over-the-air (“OTA”) software update management service that enables secure delivery of firmware, applications and content to a variety of devices deploying software, such as connected cars, consumer devices and embedded systems.
The IP&L unit is responsible for the management and monetization of the Company’s global patent portfolio.  The patent portfolio continues to provide a competitive advantage in the Company’s core product areas as well as providing leverage in the development of future technologies and licensing programs in both core and adjacent vertical markets.  The Company owns rights to an array of patented and patent pending technologies which include, but are not limited to, operating systems, networking infrastructure, acoustics, messaging, enterprise software, automotive subsystems, cybersecurity and wireless communications.  As of February 28, 2017, the Company owned approximately 38,500 worldwide patents and applications, with an average life of about 11.5 years.
AtHoc
In fiscal 2016, the Company expanded its focus in the messaging business with the acquisition of AtHoc, a secure, networked crisis communications solutions market leader. The AtHoc software platform enables people, devices and organizations to exchange critical information in real time during business continuity and life safety operations. The platform securely connects with a diverse set of endpoints, including mobile devices running iOS and Android, PC and Mac desktops, digital displays, radios, IP phones, sirens, fire panels and speakers to facilitate collaboration and enhance situational awareness. The Company has continued to expand the AtHoc platform’s global reach with localized software and global deployment options.

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SecuSUITE for Enterprise
The acquisition of Secusmart in fiscal 2015 strengthened the Company’s secure enterprise mobility portfolio by adding a leading secure voice and text messaging solution with Secusmart’s advanced encryption and anti-eavesdropping capabilities. The Company has since expanded on Secusmart’s original hardware-based offering by launching SecuSUITE for Enterprise, a multi-OS voice encryption software solution that protects mobile calls with a maximum level of security. With SecuSUITE for Enterprise, users are able to conduct secure conversations worldwide and to share voice and text messages protected with 128-bit encryption on the individual device level. SecuSUITE for Enterprise comes with a user-friendly, cloud-based portal that enables administrators to enroll or deactivate users and adjust settings without the need to set up additional IT infrastructure.
BBM
In fiscal 2017, the Company entered into a strategic alliance and licensing agreement with Emtek, a leading media company in Indonesia, to provide cross-platform consumer BBM users with access to enriched content and services. This arrangement enables Emtek to develop and commercialize new consumer BBM applications and services for Android, iOS and Windows Phone devices.
The Company continues to support and enhance the BBM Enterprise (formerly BBM Protected) platform, an enterprise-grade secure instant messaging service for all leading mobile operating systems. BBM Enterprise builds upon the Company’s proven security model, protecting data both at rest and in transit and encrypting instant messages, voice calls, and video calls. In fiscal 2017, the Company entered the Communications Platform as a Service (CPaaS) market by launching the BBM Enterprise SDK to enable independent software vendors (“ISVs”) to integrate the secure messaging, voice and video capabilities of BBM Enterprise into their applications and services.
Professional Cybersecurity Services
The acquisition of Encription in February 2016 led to the announcement of the Company’s new Professional Cybersecurity Services practice, which further expanded the Company’s security portfolio. The Company’s cybersecurity consulting services and tools, combined with the Company’s existing security solutions, help customers identify the latest cybersecurity threats, test for vulnerabilities, develop risk-appropriate mitigations, implement and maintain IT security standards and techniques, and defend against the risk of future attacks. This new practice leverages the Company’s proven leadership in high-security environments and enables enterprises and governments to meet specific compliance goals by implementing customized strategies to protect business data, customer information, intellectual property and brand reputation.
Mobility Solutions
The BlackBerry brand, security and other product features continue to have appeal to a wide range of smartphone users and as such the Company is pursuing a new strategic direction in the Mobility Solutions segment that includes both the development and licensing of the Company’s secure device software and the outsourcing of all handset hardware development to partners. As part of this new direction, in fiscal 2017 the Company entered into three license agreements, as noted above under “General Development of the Business”, under which the Company has licensed its security software and service suite, as well as related brand assets, to third parties who will design, manufacture, sell and provide customer support for BlackBerry-branded handsets featuring the Company’s secure Android software. TCL is the Company’s exclusive licensee partner for all global markets other than India, Sri Lanka, Nepal and Bangladesh, where the Company’s licensee partner is Optiemus, and Indonesia, where the Company’s licensee partner is PT BB Merah Putih. The Company intends to expand its security software and brand licensing program to include a broader set of devices and other endpoints.
During fiscal 2017, the Company launched two all-touch secure Android smartphones, DTEK50 and DTEK60, and TCL announced the launch of the BlackBerry-branded KEYone smartphone, offering the most secure Android smartphone experience together with a physical keyboard, with availability beginning in the first quarter of fiscal 2018. The Company also continues to offer its PRIV secure Android smartphone and its Passport and Leap BlackBerry 10 smartphones, as well as smartphone accessories and non-warranty repair services.
The Company delivers BlackBerry productivity applications to Android smartphone users around the world via the Google Play store, and also continues to develop updates for its legacy BlackBerry 10 platform. During fiscal 2017, the Company released BlackBerry OS 10.3.3, which achieved NIAP certification and delivers the strictest government-grade security to customers who require the highest levels of protection for critical data.
SAF
The SAF segment consists of operations relating to subscribers using mobile devices with the Company’s legacy BlackBerry 7 and prior operating systems. The Company continues to earn service access fees on these subscribers, whose network traffic utilizes the Company’s infrastructure. The number of active subscribers under the SAF segment is in decline, and as a result SAF is a legacy business and not a part of the Company’s strategic focus.

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Sales, Marketing, Distribution and Customers
The Company primarily generates revenue from the licensing of enterprise software and sales associated services, as well as the licensing of BlackBerry smartphone branding and handset software. The Company also generates revenue from; (i) the embedded market through licensing BlackBerry QNX software products and providing professional services to support customers in developing their products, (ii) the Company’s secure messaging products and services sold by AtHoc, Secusmart and through its BBM service; and (iii) technology licensing, accessories, and non-warranty repairs. For revenue and other financial information on the two most recently completed fiscal years, see the Company’s Management Discussion and Analysis (“MD&A”) for the fiscal year ended February 28, 2017, in the section entitled “Results of Operations - Fiscal year ended February 28, 2017 compared to fiscal year ended February 29, 2016 - Revenue”.
The Company licenses the BlackBerry Secure platform, including its individual components and applications, AtHoc and complementary third-party applications via its direct sales force and value added resellers. The Company also licenses its enterprise software and services through global wireless communications carriers, which are able to bill separately for BlackBerry UEM services, and other distribution partners around the world.
During fiscal 2017, the Company marketed and sold its BlackBerry smartphone products to both enterprise and consumer end users primarily through global wireless communications carriers as well as through third party distribution channels. The Company used a sales and marketing team that supported its partners through training, technical account management and field marketing initiatives. In fiscal 2017, the Company announced three device software licensing agreements, enabling selected partners to design, manufacture, sell and provide customer support for future BlackBerry-branded smartphones on a global basis.  BlackBerry will continue to control and develop its handset security and software solutions, serve its customers and maintain trusted BlackBerry security software and the BlackBerry brand. In certain markets, BlackBerry 10 and Android smartphones are also available directly from the Company through direct sales, including on ShopBlackBerry.com and through third party online retailers.
The Company licenses BlackBerry QNX, Certicom and Paratek technology and provides professional engineering services to OEM customers in the automotive, mobile and other embedded software markets via a direct sales force and indirectly through channel partnerships. The licenses are monetized as royalties on units shipped and through project development, tools and maintenance fees.
The Company markets and sells its BlackBerry Radar secure asset tracking products and services to enterprise users through its internal sales force as well as through third party distribution channels. The Company also markets and sells its OTA software update management service through its internal sales force to enterprise customers building connected embedded systems.
The Company maintains a geographically-dispersed salesforce that is organized regionally and by channel.
For revenues by geographic region for the two most recently completed fiscal years, see the Company’s MD&A for the fiscal year ended February 28, 2017, in the section entitled “Results of Operations - Fiscal year ended February 28, 2017 compared to fiscal year ended February 29, 2016 - Revenue - Revenue by Geography”.
For customer concentration information during the two most recently completed fiscal years, see the Company’s MD&A for the fiscal year ended February 28, 2017, in the section entitled “Market Risk of Financial Instruments - Credit and Customer Concentration.”
Competitive Strengths
The Company’s competitive strengths include the following:
Enterprise Solutions and Services
The Company’s enterprise software portfolio offers leading unified endpoint management, secure business productivity, application containerization, secure collaboration and DRM capabilities. The Company is recognized for attaining the highest levels of security certifications and approvals for many of its mobility and communications solutions. The inclusion of a sophisticated network operations centre in the BlackBerry infrastructure is also a key differentiator. The Company pioneered the use of this architecture to route messages reliably and efficiently to and from mobile devices, and over time has expanded capabilities to enable end-to-end secure communications between mobile devices and applications and enterprise networks.
BTS
The Company’s competitive strengths in its BTS business are rooted in the Company’s proprietary technology, including BlackBerry QNX’s POSIX compliant micro-kernel architecture for embedded software applications, Certicom’s cryptography applications, and Paratek’s adaptive RF antenna tuning technology.  In addition, BlackBerry QNX, as a trusted and recognized leader in software for automotive electronics, brings decades of accumulated knowledge and proven reliability to the embedded software market.

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AtHoc
AtHoc is a leader in network-centric, interactive crisis communication and is the leading provider of such solutions to the DoD, the U.S. Department of Homeland Security, and leading healthcare, industrial and commercial organizations. The AtHoc platform has been certified by the U.S. Department of Homeland Security for its security, integrates with legacy systems, is mobile, and supports on-premise and cloud-based deployments.
BBM
BBM leverages the BlackBerry infrastructure to offer a rich messaging experience for iPhone, Android and BlackBerry users with features such as free voice calling over Wi-Fi, one-click sharing of files and photos, Dropbox integration, location sharing and BBM Channels. BBM Enterprise provides full end-to-end message encryption (using FIPS 140-2 validated cryptographic libraries) for enterprise customers, with no separate hardware required.
Mobility Solutions
BlackBerry-branded smartphones are designed with a unique focus on security and privacy, beginning with the manufacturing process that embeds security at the hardware level (“hardware root of trust”) and continues through every layer of the device. BlackBerry 10 smartphones are used by governments and regulated industry customers with high security requirements. The latest BlackBerry 10 operating system (10.3.3) was certified for NIAP compliance. The Company’s most recent BlackBerry-branded handsets are the most secure Android smartphones and feature platform hardening software as well as security features designed to protect personal privacy and sensitive data.
Competition
The Company is engaged in markets that are highly competitive and rapidly evolving. Frequent new product introductions and changes to mobile devices, operating systems, applications, security threats, industry standards and the overall technology landscape result in continuously evolving customer requirements for mobile solutions. The Company competes with a broad range of vendors in each of its businesses. Key competitive factors important to the Company across its businesses include product features (including security features), relative price and performance, product quality and reliability, compatibility across ecosystems, service and support, and corporate reputation.
In fiscal 2017, the Company pivoted its strategy to focus the business on software and services that secure, manage and connect the Enterprise of Things. Providers of enterprise software solutions that compete with the Company’s enterprise solutions and services offerings include VMware Inc., Microsoft Corporation (“Microsoft”), MobileIron Inc., Citrix Systems, Inc., SOTI Inc., SAP SE, Box Inc. and IBM Corporation.
Manufacturers of mobile devices that compete with the BlackBerry-branded smartphones, whether designed by the Company or by its device software licensee partners, include Apple Inc. (“Apple”), Samsung, Microsoft, HTC Corporation, LG Electronics Inc., Huawei Technologies Co., Ltd., Lenovo Group Ltd., ZTE Corporation, and Xiaomi, Inc. Providers of major mobile operating system platforms that compete with the Company’s BlackBerry 10 and BBOS platforms include Apple (iOS), Google (Android) and Microsoft (Windows 10 Mobile).
Products that compete with the Company’s BBM service include Facebook’s WhatsApp, Facebook Messenger, Microsoft’s Skype, Line Corporation’s LINE, Apple’s iMessage, Tencent’s WeChat, Viber, Kik, KakaoTalk, Telegram and Snapchat.
BBM Enterprise, along with its newly released SDK, is a unique services platform that combines messaging, voice and video communications over a secure, IP-based network.  Competitors that offer some of these features in less secure solutions include Layer, Nexmo, Twilio, Pilvo and Sinch.
Providers of EFSS software that compete with BlackBerry Workspaces include: Accellion, Acronis, VMWare Inc., Box, Citrix, Dropbox, Egnyte, Huddle Intralinks (Synchronoss), Microsoft, Syncplicity (Skyview Capital), Thru, and Varonis.
Providers of embedded software that compete with the Company’s BlackBerry QNX automotive business include Microsoft, which offers its Windows Embedded platform for automotive infotainment applications. Android and Linux operating systems also compete in the embedded computing space. Both Apple and Google have also demonstrated interest in the automotive sector. Apple’s CarPlay™ software is resident on the iPhone® and enables its own infotainment user experience onto the screen in an automobile. Google has launched an Android application programming interface, Android Auto, for Android automobile applications. Other competitors of the Company’s BlackBerry QNX business include Green Hills Software, Intel Corporation (“Intel”), MontaVista Software, Mentor Graphics Corporation, and Sysgo AG.
Providers of technologies that compete with the Company’s OTA software update management service are Samsung, Delphi Automotive PLC, Intel and Verizon Telematics, as well as solutions internally developed by automotive OEMs.
Providers of solutions that compete with BlackBerry Radar are I.D. Systems, Inc., SkyBitz, ORBCOMM Inc., Spireon, Inc. and Omnitracs, LLC.

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See also the Risk Factor entitled “The Company faces intense competition”.
Product Design, Engineering and Research and Development
The Company’s research and development (“R&D”) strategy seeks to provide broad market applications for products derived from its technology base.
The Company dedicates a major portion of its R&D investments to the development of software products and services that meet the needs of both enterprise IT departments and individual customers. This includes enterprise solutions and services in mobile security, management, productivity and collaboration offerings, application security and containerization, IAM, and EFSS with file level data protection. Solutions include leading security capabilities at each level of the platform in order to address the needs of customers for securing devices, applications, content and work data - at rest and in transit.
The Company’s software development also supports products and services for BlackBerry-branded smartphones, including the BlackBerry 10 operating system and Android operating system enhancements, such as advanced privacy controls, verified boot and secure bootchain, and Android kernel hardening. The Company is also expanding its mobile software expertise to develop highly secure operating system software enhancements for non-smartphone endpoints under the BlackBerry Secure brand.
To support its IoT and BlackBerry Radar initiatives, the Company creates innovative and robust hardware designs combined with proprietary software and firmware features. These tightly integrated solutions allow the Company to customize its proprietary technical solutions to address new applications and market demands.
Additionally, BlackBerry QNX has developed and continues to enhance an embedded computing platform utilizing its unique micro-kernel operating system, multimedia and infotainment platform-specific middleware, as well as acoustic processing products. BlackBerry QNX also recently announced the AVIC to advance technology innovation for connected and autonomous vehicles.
The Company’s investment in longer term research is, in part, supported by taking advantage of specific government financial assistance programs where available. For example, the Company qualifies for investment tax credits on eligible expenditures on account of the Canadian scientific research and experimental development program. For additional information, see Note 9 to the Consolidated Financial Statements.
Third Party Software Developers
To facilitate the development of an application ecosystem for its products and services, the Company offers the BlackBerry Development Platform for third-party enterprise application developers and independent software developers, the BlackBerry QNX Car Platform for Infotainment and the BlackBerry 10 / BlackBerry OS application platform.
BlackBerry Development Platform
The Company offers the BlackBerry Development Platform, an enterprise grade toolset which enables enterprise application developers and ISVs to build secure, powerful and customized mobility solutions for almost every use case. The platform augments the capabilities of BlackBerry Dynamics for building secure applications, by adding tools for BlackBerry UEM, BlackBerry Workspaces, and other products, including BBM Enterprise. More than 4,000 third-party enterprise applications have been developed on the BlackBerry Development Platform.
Independent software vendors that use the BlackBerry Dynamics SDK to secure their applications, can make them available to the BlackBerry enterprise customer base on the Marketplace for Enterprise Software, which contains over 80 secure applications.
BlackBerry QNX Car Platform for Infotainment
BlackBerry QNX offers the BlackBerry QNX CAR Platform for Infotainment 2.2, based on the BlackBerry QNX 6.6 Software Development Platform that supports Android applications through integration with the BlackBerry QNX Hypervisor.
BlackBerry 10 / BlackBerry OS Application Platform
The Company provides a feature-rich open standards-based development platform, which allows third party commercial developers to build and deploy custom applications to run on BlackBerry 10 and BlackBerry OS smartphones. To facilitate this, the Company provides a number of products and technologies to third party developers, wireless carriers and enterprise customers to enable them to develop, distribute and manage these applications. For application development, the Company provides a suite of software development tools enabling applications to be developed using a variety of programming languages.

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For distribution of personal and consumer applications, the Company provides wireless carriers with the ability to distribute select applications and rich media content to their customer base and also provides BlackBerry World as a direct storefront for BlackBerry 10 and BlackBerry OS customers.
Intellectual Property
The protection of intellectual property is an important part of the Company’s operations. The policy of the Company is to apply for patents, acquire and/or seek other appropriate proprietary or statutory protection when it develops valuable new or improved technology. The Company believes that the rapid pace of technological change in the industries in which the Company operates makes patent and trade secret protection important, and that this protection must be supported by other means including the ability to attract and retain qualified personnel, new product introductions and frequent product enhancements.
The Company believes that its patent portfolio continues to provide a competitive advantage in its core product areas as well as provide leverage in the development of future technologies. The Company does not believe that it is dependent upon a single patent or even a few patents. Rather, the Company’s success depends more upon its extensive know-how, innovative culture, and technical leadership. The Company does not rely primarily on patents or other intellectual property rights to protect or establish its market position; however, it is prepared to enforce its intellectual property rights in certain technologies when attempts to negotiate mutually agreeable licenses are not successful.
The Company protects its technology through a combination of patents, designs, copyrights, trade secrets, confidentiality procedures and contractual arrangements. The Company seeks to patent key concepts, components, protocols, processes and other inventions that it considers to have commercial value or that will likely give the Company a technological advantage. Although the Company applies for patent protection primarily in Canada, Europe and the United States, the Company has filed, and will continue to file, patent applications in other countries where there exists a strategic technological or business reason to do so. To broadly protect the Company’s inventions, the Company has a team of in-house patent attorneys and also consults with outside patent attorneys who interact with employees, review invention disclosures and prepare patent applications on a broad array of core technologies and competencies. As a result, the Company owns rights to an array of patented and patent pending technologies relating to wireless communication technology and enterprise software. As of February 28, 2017, the Company owned approximately 38,500 worldwide patents and applications.
It is the Company’s general practice to enter into confidentiality and non-disclosure agreements with its employees, consultants, contract manufacturers, customers, potential customers and others to attempt to limit access to, and distribution of, its proprietary information. In addition, the Company generally enters into agreements with employees that include an assignment to the Company of all intellectual property developed in the course of employment.
The Company also enters into various types of licensing agreements related to technology and intellectual property rights. The Company enters into certain of these agreements to obtain rights that may be necessary to produce and sell products. The Company also licenses its technology and intellectual property to other parties through various licensing agreements, including as part of the BTS business.
Production
The Company transitioned the Mobility Solutions segment from an outsourced handset manufacturing model to a software licensing model during fiscal 2017. The Company now licenses its device security software and service suite, as well as related brand assets, to TCL Communication, PT BB Merah Putih, and Optiemus. The design and manufacture of future BlackBerry-branded smartphones will be undertaken by these licensed partners, who have agreed to adhere to the Company’s quality, security, and branding guidelines.
The Company outsources all of its other hardware manufacturing requirements, supporting IoT and BlackBerry Radar, to specialized global electronic manufacturing services and joint development manufacturing companies who are positioned to meet the volumes, scale, cost and quality requirements of the Company. The Company’s hardware model also strives to provide a supply chain with speed advantages in designing for faster product life cycles, as well as to leverage scale and manufacturing strength beyond current volumes.
The Company generally provides sourcing guidance and decisions for materials are made jointly with the outsourcing partner. In most cases the ongoing supply is the sole responsibility of the outsourcing supplier. The Company relies on the outsourcing partner and its suppliers to supply functional components on a timely basis and in sufficient quantities.
Industry Associations
The Company is an active participant in numerous industry associations and standards bodies. The Company’s involvement with leading associations includes standards development, government advocacy, joint marketing, participation in conferences and trade shows, training, technology licensing by the Company and business development.
Regulatory Matters
In addition to the regulatory requirements applicable to any business, a wireless device manufacturer must obtain certification from the radio/telecommunications regulatory authorities in most jurisdictions before commencing commercial sale of its products in those jurisdictions.
The Company’s wireless devices, including the BlackBerry Radar device, must be approved by the Federal Communications Commission (“FCC”) before they can be used in commercial quantities in the United States. In Canada, the relevant regulatory authority is Industry Canada/Innovation, Science and Economic Development Canada (“IC/ISED”). The European Union (“EU”) defines requirements within the Radio and Telecommunications Terminal Equipment (“R&TTE”) Directive for making wireless devices available in EU member states. Regulatory requirements are similar in other jurisdictions. All regulators require wireless devices to meet various standards, including limits with respect to interference with other electronic equipment and safety standards with respect to human exposure to electromagnetic radiation.
The Company’s wireless devices, which are made commercially available by the Company across multiple markets, meet FCC, IC/ISED, and R&TTE requirements as the market requires.
Environmental Regulations
Some of the Company’s operations, principally in its Mobility Solutions and IoT businesses, are subject to regulation under various provincial, state, federal and international laws relating to environmental protection and the proliferation of hazardous substances. In parts of Europe, North America, Asia-Pacific and Latin America, the Company is obligated to comply with substance restrictions, packaging regulations, energy efficiency ratings and certain product take-back and recycling requirements. In addition, the Company may be required to comply with emerging substance restrictions or energy efficiency requirements, as well as product take-back obligations in other jurisdictions that would make the Company responsible for recycling and/or disposing of products the Company has sold. These and other environmental laws may become more stringent

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over time, may be required in more places of the Company’s business and may require the Company to incur additional compliance costs.
Corporate Responsibility
The Company is committed to operating in a sustainable way that respects the environment, Company employees, the communities in which the Company operates and the Company’s business partners around the world. Product sustainability efforts include implementing design for environment principles, material selection processes, energy efficiency and packaging assessments, as well as product take-back programs. In addition, the Company engages with its suppliers to conduct due diligence into the source and chain of custody of the so-called “conflict minerals” (which currently include the minerals from which gold, tantalum, tin, and tungsten are derived) that are necessary to the functionality or production of the Company’s hardware products.
The Company has formalized a number of policies to reflect the Company’s commitment to responsible business practices, including a Responsible Minerals Policy, and periodically issues a Corporate Responsibility report. This report and other documents and policies relating to the Company’s corporate responsibility initiatives can be viewed on the Company’s website at http://ca.blackberry.com/company/about-us/corporate-responsibility.html and are not incorporated by reference in this AIF.
Employees
As of February 28, 2017, the Company had 4,044 full-time employees.
Facilities
The Company’s headquarters are located in Waterloo, Ontario, Canada. The Company’s main campus in Waterloo consists of three leased buildings. The Company also operates facilities in the United States, Latin America, Asia-Pacific, Europe, Middle East and Africa.
LEGAL PROCEEDINGS
The Company is involved in litigation in the normal course of its business, both as a defendant and as a plaintiff. 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 industries in which the Company competes have 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 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, subject the Company to significant liabilities and could have the other effects that are described in greater detail under “Risk Factors” in this AIF, including the risk factors entitled “Litigation against the Company may result in adverse outcomes” and “The Company could be found to have infringed on the intellectual property rights of others”.
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. Where a potential loss is considered probable and the amount is reasonably estimable, provisions for loss are made based on management’s assessment of the likely outcome. 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. Any settlements or awards under such claims are provided for when reasonably determinable.
As of February 28, 2017, there are no 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. Further, there are claims outstanding for which the Company has assessed the potential loss as reasonably possible to result; however, an estimate of the amount of loss cannot reasonably be made. There are many reasons that the Company cannot make these assessments, including, among others, one or more of the following: the early stages of a proceeding does not require the claimant to specifically identify the patent that has allegedly been infringed; damages sought are unspecified, unsupportable, unexplained or uncertain; discovery has not been started or is incomplete; the facts that are in dispute are highly complex (e.g., once a patent is identified, the

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analysis of the patent and a comparison to the activities of the Company is a labour-intensive and highly technical process); the difficulty of assessing novel claims; the parties have not engaged in any meaningful settlement discussions; the possibility that other parties may share in any ultimate liability; and the often slow pace of litigation.
Though they do not meet the test for accrual described above, the Company has included the following summaries of certain of its legal proceedings that it believes may be of interest to its investors.
Between October and December 2013, several purported class action lawsuits and one individual lawsuit were filed against the Company and certain of its former officers in various jurisdictions alleging that during the period from September 27, 2012 through September 20, 2013, 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. In respect of the putative U.S. class actions, four motions for the appointment of a lead plaintiff were filed. On March 14, 2014, the Judge consolidated the proceedings in the U.S. District Court for the Southern District of New York. On May 27, 2014, the Consolidated Amended Class Action Complaint was filed. The Company filed a motion to dismiss the complaint. On March 13, 2015, the court issued an order granting the Company’s motion to dismiss. The plaintiffs filed a motion for reconsideration and for leave to file an amended complaint, which was denied by the court on November 13, 2015. The plaintiffs filed a notice of appeal on December 11, 2015. 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 plaintiffs’ request for leave to amend. The plaintiffs filed their brief in support of their motion for leave to amend on November 17, 2016. The Company’s opposition was filed on December 19, 2016, and the plaintiffs filed their brief in support of the motion on January 3, 2017. In respect of the putative Ontario class action, the plaintiffs filed a motion for certification and leave to pursue statutory misrepresentation claims. On November 16, 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. Proceedings are ongoing.
On October 12, 2015, a group of Good institutional investors filed a putative class action lawsuit on behalf of Good’s common shareholders against members of Good’s former board of directors (the “GTC Directors”) related to the Company’s acquisition of Good (the “GTC Lawsuit”). The plaintiffs allege that the GTC Directors breached their fiduciary duty by engaging in a self-interested transaction that benefited the preferred shareholders at the expense of the common shareholders. The plaintiffs are seeking monetary damages, as well as rescission of the merger agreement between Good and the Company. While neither Good nor the Company are parties to the GTC Lawsuit, Good has certain obligations to indemnify the defendants and is providing a defense. On October 29, 2015, Good filed a complaint alleging that the plaintiffs breached their contractual obligations under a voting agreement providing that, in the event of a sale transaction that was approved by both the GTC Directors and a majority of the Good preferred shareholders, the plaintiffs were required to vote their shares in favour of the transaction and refrain from exercising any appraisal or dissenter rights. Good alleges that the filing of the GTC Lawsuit was a breach of the voting agreement. On December 31, 2015, several Good shareholders filed a petition seeking appraisal against Good. On August 25, 2016, the Court granted the plaintiff’s motion for leave to file an amended complaint naming additional defendants. Good and the Company are not named in the amended complaint. Proceedings are ongoing.
On April 20, 2016, the Company and Qualcomm entered into an agreement to arbitrate a dispute over the application of a royalty cap agreement related to a license agreement between the parties. The Company filed its Demand for Arbitration and Statement of Claim on May 2, 2016. Qualcomm filed its response on May 16, 2016. The arbitration hearing was held from February 27, 2017 to March 3, 2017. Proceedings are ongoing.
On April 28, 2016, one of the Company’s licensors filed a Request for Arbitration with the International Chamber of Commerce International Court of Arbitration. The dispute relates to whether certain payments allegedly due under a patent agreement between the parties are in fact owed under the terms of the agreement. The Company filed its response on July 5, 2016. The Company filed a motion to dismiss on February 16, 2017, and a hearing on that motion is scheduled for March 30, 2017. Proceedings are ongoing.
ENTERPRISE RISK MANAGEMENT
The Company has defined and implemented an approach to manage its exposure to risk, consisting of: (i) a risk management framework to regularly identify, assess, treat, monitor and report on current and potential risks, and (ii) a governance structure that clearly defines the responsibilities of the Board, the senior leadership team, employees and other stakeholders to support the risk management framework. This approach to enterprise risk management is integral to the Company’s business activities and is designed to:
•
promote effective corporate governance and decision-making by enabling the consistent evaluation of risk on a consolidated basis;

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•
ensure that risks are managed responsibly in the context of the Company’s strategy and objectives;
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support the development of internal controls;
•
facilitate the reliability and transparency of financial and operational reporting;
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assist in compliance with laws, regulations, policies, and contracts; and
•
reduce harm to financial performance and safeguard the Company’s assets.

Risk Management Framework Policy and Risk Appetite
The Company’s risk management framework policy defines responsibilities for the identification, assessment, management and reporting of risks, and sets out expectations for ownership, resource assignment and compliance. The scope of the framework embraces internal functions as well as those activities for which the Company engages support from third parties.
To support the risk management framework and risk oversight activities, the Company maintains a risk appetite statement that defines, by category of risk, the Company’s tolerance for risk-taking having regard to potential rewards and overall business strategies and objectives. The Company risk profile is regularly assessed against the risk appetite statement. The risk appetite statement is reviewed and updated as the Company’s business strategy and operating environment evolves.
Risk Governance and Oversight
The Company utilizes a “three lines of defense” governance structure to define how the responsibility for risk management activities is assigned:
•
The first line of defense for managing risks resides with the management of each business unit. Risk exposures are identified and mitigated at a granular level through various ongoing management activities including business planning, operations management, reporting, and process improvement projects.
•
Oversight of business unit management is provided by the second line of defense, the Security Risk and Compliance Committee (“SRCC”), which meets at least quarterly and is supported by various compliance, security and control functions. The SRCC is composed of manager representatives from each major business group and provides strategic direction by defining key policies, identifying emerging risk trends, and sponsoring training.
•
The internal audit function comprises the third line of defense, providing independent assurance of the effectiveness of the Company’s risk management activities and internal controls related to (i) financial reporting and integrity and (ii) other areas of risk as assigned by the Audit and Risk Management Committee from time to time. The internal audit function may also review the governance structures and mandates of the first two lines of defense.
Additional governance and oversight is provided by the risk management council (“RMC”), a council of internal senior leaders which oversee the risk management activities undertaken by business group management and the SRCC. The RMC meets at least quarterly with the Chief Risk Officer serving as the Chair. The RMC reviews the Company’s risk profile, risk criteria and limits, and monitors remediation activities to address gaps. The RMC also approves the risk appetite statement and promotes a culture of risk management and compliance across the Company.
The Chief Risk Officer provides regular reporting to the Board and the Audit and Risk Management Committee on the Company’s risk profile and the activities overseen by the RMC. The Board is ultimately responsible for overseeing the Company’s risk identification, assessment, management, monitoring and reporting activities. The Audit and Risk Management Committee assists the Board with the oversight of enterprise risk management at the Company, including risk assessment, risk compliance, the internal audit function and the controls, processes and policies used to manage the Company’s risk. The Compensation, Nomination and Governance Committee of the Board also assists the Board with the oversight of risk management and controls with respect to the Company’s compensation policies and practices, including the administration of the Company’s equity-based compensation plans.
RISK FACTORS
Investors in the Company’s securities should carefully consider the following risks, as well as the other information contained in this AIF and in the Company’s MD&A for the fiscal year ended February 28, 2017. If any of the following risks actually occurs, the Company’s business could be materially harmed. The risks and uncertainties described below are not the only ones the Company faces. Additional risks and uncertainties, including those of which the Company is unaware or the Company deems immaterial, may also have a material adverse effect on the Company’s business, financial condition and results of operations.
The Company may not be able to enhance, develop, introduce or monetize products and services for the enterprise market in a timely manner with competitive pricing, features and performance.
The industries in which the Company competes are characterized by increasingly rapid technological change, frequent new product introductions, frequent market price reductions, constant improvements in features and short product life cycles. The

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Company’s future success depends upon its ability to enhance its current products and services, including the BlackBerry Secure platform, to provide for their compatibility with evolving industry standards and operating systems, to address competing technologies and products developed by other companies, and to continue to develop and introduce new products and services offering enhanced performance and functionality on a timely basis at competitive prices.
The process of developing new technology is complex and uncertain, and involves time, substantial costs and risks, which are further magnified when the development process involves multiple operating platforms. The Company may be required to commit significant resources to developing new products, software and services before knowing whether such investment will result in products, software or services that the market will accept.
The Company’s inability, for technological or other reasons, some of which may be beyond the Company’s control, to enhance, develop, introduce and monetize products and services in a timely manner, or at all, in response to changing market conditions or customer requirements could have a material adverse effect on the Company’s business, results of operations and financial condition or could result in its products and services not achieving market acceptance or becoming obsolete. In addition, if the Company fails to deliver a compelling customer experience or accurately predict emerging technological trends and the changing needs of customers and end users, or if the features of its new products and services do not meet the demands of its customers, the Company’s business, results of operations and financial condition could be materially harmed.
The Company may not be able to maintain or expand its customer base for its software and services offerings to grow revenue, achieve sustained profitability or offset the decline in the Company’s service access fees.
The Company has focused its strategy on software and services to grow revenue and generate sustainable profitability.
For the Company to increase its software and services revenues, it must continually grow its customer base by attracting new customers or, in the case of existing customers, deploying software and services across more end points or attracting additional users in such existing customers’ businesses. The Company also needs to sell additional software and services over time to the same customers, or have customers upgrade their level of service. If the Company is unable to promote a compelling value proposition to customers and its efforts to sell or upsell software or services as described above are not successful, its results of operations could be materially impacted.
Existing customers that purchase the Company’s software and services have no contractual obligation to renew their annual subscriptions or purchase additional solutions after the initial subscription or contract period. The Company’s customers’ expansion and renewal rates may decline or fluctuate as a result of a number of factors, including the perceived need for such additional software and services, the level of satisfaction with the Company’s software and services, features or functionality, the reliability of the Company’s software and services, the Company’s customer support, customer budgets and other competitive factors, such as pricing and competitors’ offerings. For smaller or simpler deployments, the switching costs and time are relatively minor compared to traditional enterprise software deployments and such a customer may more easily decide not to renew with the Company and switch to a competitor’s offerings. Accordingly, the Company must invest significant time and resources in providing ongoing value to these customers and in enhancing its reputation as an enterprise software vendor. If these efforts fail, or if the Company’s customers do not renew for other reasons, or if they renew on terms less favourable to the Company, the Company’s revenue may decline and its results of operations could be materially impacted.
The Company’s ability to grow software and service revenue is also dependent on its ability to expand its distribution capabilities with partners, resellers and licensees, as well as building a direct sales force, which requires significant time and resources, including investment in systems and training. There can be no assurance that the Company will be successful in implementing its distribution strategy. See also the Risk Factor entitled “The Company’s success depends on its relationships with resellers and distributors”.
In recent years, the Company has experienced continued significant erosion of service revenue from SAF charged to subscribers using BlackBerry 7 and prior BlackBerry operating systems. The Company expects that such revenue will continue to decline. If the Company is unable to develop, deliver and support a compelling integrated software and services offering that will mitigate the decline of service access fee revenue and enable the Company to recover the costs associated with its network infrastructure, this could have a material adverse effect on the Company’s business, results of operations and financial condition.
The Company faces intense competition.
The Company is engaged in markets that are highly competitive and rapidly evolving, and has experienced, and expects to continue to experience, intense competition from a number of companies. No technology has been exclusively or commercially adopted as the industry standard for many of the products and services offered by the Company. Accordingly, both the nature of the competition and the scope of the business opportunities afforded by the markets in which the Company competes are uncertain.
The Company’s competitors, including new market entrants, may implement new technologies before the Company does, deliver new products and services earlier, or provide products and services that are disruptive or that are attractively priced or

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enhanced or better quality compared to those of the Company, making it more difficult for the Company to win or preserve market share. Customers may also question the Company’s ability to compete or remain viable as a provider of secure mobile and endpoint communication software solutions over the longer term and could decide to replace the Company’s products and services with those of its competitors.
Some of the Company’s competitors have greater name recognition, larger customer bases and significantly greater financial, technical, marketing, public relations, sales, distribution and other resources than the Company does. In particular, some of the Company’s competitors have increased their focus on marketing and product development in the enterprise market. In addition, competition may intensify as the Company’s competitors enter into business combinations or alliances and established companies in other market segments expand to become competitive with the Company’s business.
The impact of the competition described above could result in fewer customer orders, loss of market share, pressure to reduce prices, commoditization of product and service categories in which the Company participates, reduced revenue and reduced margins. If the Company is unable to compete successfully, there could be a material adverse effect on the Company’s business, results of operations and financial condition.
The Company’s success depends on its continuing ability to attract new personnel, retain existing key personnel and manage its staffing effectively.
The Company’s success is largely dependent on its continuing ability to identify, attract, develop, motivate and retain skilled employees, including members of its executive team. Competition for highly skilled management, technical, research and development and other employees is intense and increasing in the industries in which the Company participates, and the Company has experienced solicitations of its employees by its competitors.
The Company’s ability to successfully execute its strategies and realize the anticipated benefits of those strategies, among other factors such as compensation programs, may impact the Company’s ability to attract new, and retain existing, employees. For many employees, equity awards are a key element of total compensation, and certain equity awards contain conditions relating to the Company’s share performance that make the future value of those awards uncertain. If the anticipated value of such performance-based equity awards does not materialize or if the Company does not obtain shareholder approval as needed from time to time to continue granting equity awards in amounts that are viewed to be competitive, the Company’s ability to attract, retain and motivate executives and key employees could be weakened. Any failure by the Company to attract and retain key employees could have a material adverse effect on the Company’s business, results of operations and financial condition.
The Company’s recent restructuring activities, as well as the Company’s decline in revenue, share price performance (particularly for those employees for whom equity-based compensation has been a key element of their total compensation) and perceived future prospects, among other factors, may impact the Company’s ability to attract new, and retain existing, employees. In addition, as a result of its restructuring activities, the Company may experience a loss of continuity, loss of accumulated knowledge, internal compliance gaps or other inefficiencies during periods of internal reorganization.  If the Company does not maintain appropriate staffing, mitigate turnover and effectively utilize employees with the right mix of skills and experience across the functions necessary to meet the current and future needs of its business, the financial and operational performance of the Company could suffer.
The Company’s success depends on its relationships with resellers and distributors.
The Company’s ability to maintain and expand its market reach is increasingly dependent on establishing, developing and maintaining relationships with third party resellers and distributors, including network carriers. The Company relies on these partners to promote and deliver the Company’s current and future products and services and to grow its user base.
If the Company is not successful in identifying and establishing new relationships, or maintaining or enhancing existing relationships, with successful resellers and distributors, or if the Company’s partners do not act in a manner that will promote the success of the Company’s products and services, the Company’s business, results of operations and financial condition could be materially adversely affected.
Many resellers and distributors sell products and services of the Company’s competitors and may terminate their relationships with the Company with limited or no notice and limited or no penalty. If the Company’s competitors offer their products and services to the resellers and distributors on more favorable contractual or business terms, have more products and services available, or those products and services are, or are perceived to be, in higher demand by end users, or are more lucrative for the resellers and distributors, there may be continued pressure on the Company to reduce the price of its products and services, or those resellers and distributors may stop offering the Company’s products or de-emphasize the sale of its products and services in favor of the Company’s competitors, which would have a material adverse effect on the Company’s business, results of operations and financial condition.

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The occurrence or perception of a breach of the Company’s security measures or an inappropriate disclosure of confidential or personal information could harm its business.
BlackBerry products and services frequently involve the transmission, processing and storage of proprietary, confidential and personally identifiable information, and can include on-premise and cloud deployments. Although malicious attempts to gain access to such information affect many companies across various industries, the Company is at a relatively greater risk of being targeted because of its reputation for security and the nature of its network operations.
The Company is exposed to cyber threats through the actions of outside parties, such as hacking, computer viruses, denial of service attacks, industrial espionage and other unauthorized breaches of the Company’s network or IT security. The Company is also exposed to risk as a result of employee error or malfeasance and through attempts by third parties to fraudulently induce employees to provide access to confidential or personal information.
The Company devotes significant resources to network security, encryption and authentication technologies and other measures, including security policies, procedures and awareness training, to mitigate cyber risk to its systems and data. The Company also mitigates risk by actively monitoring external threats, reviewing best practices and implementing appropriate internal controls. However, the techniques used to obtain unauthorized access or to disable or degrade service are constantly evolving and becoming more sophisticated in nature, and frequently are not recognized or identified until after they have been deployed against a target. The Company may not be able to anticipate these techniques, to implement adequate preventative measures or to identify and respond to them in a timely manner, and the Company’s efforts to do so may have a material adverse impact on the Company’s operating margins, the user experience or compatibility with third party products and services.
If the security measures implemented by the Company or its partners are breached, or perceived to be breached, or if there is an inappropriate disclosure of confidential or personal information from the Company’s systems, the Company could be exposed to significant litigation, service disruptions, remediation costs, regulatory sanctions and fines from payment card providers. In addition, any such event could materially damage the Company’s reputation, which is built in large measure on the security and reliability of BlackBerry products and services, and could lead customers to reduce or delay future purchases or to purchase products or services of the Company’s competitors. The Company’s insurance coverage may be insufficient to cover all losses or types of claims that may arise from cyber threats.
Sales to large enterprise customers and to customers in highly regulated industries and governmental entities can be highly competitive and require compliance with stringent regulation.
The Company is focused on serving enterprise customers, particularly large enterprise customers in highly regulated industries such as financial services, government, healthcare and transportation. Sales to large enterprise customers involve risks that may not be present (or that are present to a lesser extent) with sales to smaller entities. These risks include:
•
more complicated IT systems, mobile environments, security protocols and regulatory compliance requirements, which result in more difficult and time-consuming implementation processes;
•
increased purchasing power and leverage held by large customers in negotiating contracts, including more pressure for preferential pricing and other customer-favourable terms;
•
longer sales cycles due to multi-level approval processes, lengthy contract negotiations, and unplanned administrative, processing and other delays;
•
customer deferral of purchasing decisions pending large-scale adoption of technology by others or potential vendor consolidation;
•
closer relationships with, and dependence upon, large technology competitors; and
•
more intense and time-consuming customer support practices.
In addition, government demand and payment for the Company’s products and services may be adversely impacted by public sector budgetary cycles and funding authorizations.
The Company devotes substantial time and resources to its sales activities without any assurance that its investments will generate sales in accordance with anticipated volumes and timelines, or any sales at all. Also, the additional costs associated with serving large enterprise customers, as well as changes to regulations affecting such customers, could have a material adverse effect on the Company’s margins and on the Company’s ability to grow or maintain its customer base. If the Company is unable to increase sales of its products and services to large enterprises while mitigating the associated risks, the Company’s business and results of operations could be materially impacted.
The Company’s products and services are dependent upon interoperability with rapidly changing systems provided by third parties.
The Company’s platform depends on interoperability with operating systems, such as those provided by Apple, Google and Microsoft, as well as device manufacturers. Mobile operating systems are upgraded frequently in response to consumer demand and, in order to maintain the interoperability of its platform, the Company may need to release new software updates at a much

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greater pace than a traditional enterprise software company that supports only a single platform. In addition, the Company typically receives limited advance notice of changes in features and functionality of operating systems and mobile devices, and therefore the Company may be forced to divert resources from its preexisting product roadmap to accommodate these changes.
If the Company fails to enable IT departments to support operating system upgrades upon release, the Company’s business and reputation could suffer. This could further disrupt the Company’s product roadmap and cause it to delay introduction of planned products and services, features and functionality, which could harm the Company’s business. Furthermore, some of the features and functionality in the Company’s products and services require interoperability with application programming interfaces (“APIs”) of other operating systems, and if operating system providers decide to restrict the Company’s access to their APIs, that functionality would be lost and the Company’s business could be impaired.
Operating system providers have included, and may continue to include, features and functionality in their operating systems that are comparable to elements of the Company’s products and services, thereby making the Company’s platform less valuable. The inclusion of, or the announcement of an intent to include, functionality perceived to be similar to that offered by the Company’s products and services in mobile operating systems may have an adverse effect on the Company’s ability to market and sell its products and services.
The Company may not be able to generate revenue and profitability through the licensing of security software and services or the BlackBerry brand to device manufacturers.
Although the Company has pivoted its strategy to focus on growing its software and services revenue, the BlackBerry brand has historically been strongly associated with devices and the Company continues to operate its Mobility Solutions business. In fiscal 2017, the Company partnered with handset manufacturers for the development, distribution and marketing of BlackBerry-branded smartphones, such as the KEYone. Also, the Company continues to market and distribute DTEK50 and DTEK60 smartphones, as well as certain legacy models, and in fiscal 2018 intends to introduce a smartphone designed by the Company and manufactured by a third party.
The future success of the Company’s Mobility Solutions business is primarily dependent on the successful commercialization of devices featuring licensed BlackBerry mobile security software and services. The Company’s results of operations could be adversely affected if such devices, including BlackBerry-branded devices, do not achieve broad market acceptance. In addition, any failure by a licensee to act consistently with the Company’s compliance, security or quality standards may erode the value of the BlackBerry brand, impair the Company’s relationship with current and potential customers, and adversely affect the Company’s ability to sell software products and services that are commercially viable.
Network disruptions or other business interruptions could have a material adverse effect on the Company’s business and harm its reputation.
The Company’s operations rely to a significant degree on the efficient and uninterrupted operation of complex technology systems and networks, which are in some cases integrated with those of carrier partners and third-party data centre operators. The Company’s network operations and technology systems are potentially vulnerable to damage or interruption from a variety of sources, including by fire, earthquake, power loss, telecommunications or computer systems failure, cyber attack, human error, terrorist acts, war, and the threatened or actual suspension of BlackBerry services at the request of a government for alleged noncompliance with local laws or other events. The increased number of third party applications on the Company’s network may also enhance the risk of network disruption or cyber attack for the Company. There may also be system or network interruptions if new or upgraded systems are defective or not installed properly, or if data centre operators fail to meet agreed service levels.
The Company has experienced network events in the past, and any future outage in a network or system or other unanticipated problem that leads to an interruption or disruption of BlackBerry services could have a material adverse effect on the Company’s business, results of operations and financial condition, and could adversely affect the Company’s longstanding reputation for reliability. As the Company moves to handle increased data traffic and support more applications or services, the risk of disruption and the expense of maintaining a resilient and secure network services capability may significantly increase.
Acquisitions, divestitures, investments and other business initiatives may negatively affect the Company’s results of operations.
The Company has acquired, and continues to seek out opportunities to acquire or invest in, businesses, assets, products, services and technologies that expand, complement or are otherwise related to the Company’s business or provide opportunities for growth. In addition, the Company is increasingly collaborating and partnering with third parties to develop technologies, products and services, as well as seek new revenue through partnering arrangements.
These activities involve significant challenges and risks, including: that they may not advance the Company’s strategic objectives or generate a satisfactory return on investment; that the Company may have difficulty integrating and managing new employees, business systems, and technology; the potential loss of key employees of an acquired business; additional demands on the Company’s management, resources, systems, procedures and controls; disruption of the Company’s ongoing business;

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and diversion of management’s attention from other business concerns. Acquisitions, investments or other strategic collaborations or partnerships may involve significant commitments of financial and other resources of the Company. If these fail to perform as expected, or if the Company fails to enter into and execute the transactions or arrangements needed to succeed, the Company may not be able to bring its products, services or technologies to market successfully or in a timely manner, which would have a material adverse impact on results of operations.
Furthermore, an acquisition may have an adverse effect on the Company’s cash position if all or a portion of the purchase price is paid in cash, and common shares issuable in an acquisition would dilute the percentage ownership of the Company’s existing shareholders. Any such activity may not be successful in generating revenue, income or other returns to the Company, and the financial or other resources committed to such activities would not be available to the Company for other purposes. In addition, the acquisitions may involve unanticipated costs and liabilities, including possible litigation and new or increased regulatory exposure, which are not covered by the indemnity or escrow provisions, if any, of the relevant acquisition agreements.
As business circumstances dictate, the Company may also decide to divest itself of assets or businesses. The Company may not be successful in identifying or managing the risks involved in any divestiture, including its ability to obtain a reasonable purchase price for the assets, potential liabilities that may continue to apply to the Company following the divestiture, potential tax implications, employee issues or other matters. The Company’s inability to address these risks could adversely affect the Company’s business, results of operations and financial condition.
Failure to protect the Company’s intellectual property could harm its ability to compete effectively and the Company may not earn the revenues it expects from intellectual property rights.
The Company’s commercial success is highly dependent upon its ability to protect its proprietary technology. The Company relies on a combination of patents, copyrights, trademarks, trade secrets, confidentiality procedures and contractual provisions to protect its proprietary rights, all of which offer only limited protection. Despite the Company’s efforts, the steps taken to protect its proprietary rights may not be adequate to preclude misappropriation of its proprietary information or infringement of its intellectual property rights, and the Company’s ability to police such misappropriation or infringement is uncertain. The laws of certain countries in which the Company’s products and services are sold or licensed do not protect intellectual property rights to the same extent as the laws of Canada or the United States.
With respect to patent rights, the Company cannot be certain whether any of its pending patent applications will result in the issuance of patents or whether the examination process will require the Company to narrow its claims. Furthermore, any patents issued could be challenged, invalidated or circumvented and may not provide proprietary protection or a competitive advantage. In addition, a number of the Company’s competitors and other third parties have been issued patents, and may have filed patent applications or may obtain additional patents and proprietary rights, for technologies similar to those that the Company has made or may make in the future. Public awareness of new technologies often lags behind actual discoveries, making it difficult or impossible to know all relevant patent applications at any particular time. Consequently, the Company cannot be certain that it was the first to develop the technology covered by its pending patent applications or that it was the first to file patent applications for the technology. In addition, the disclosure in the Company’s patent applications may not be sufficient to meet the statutory requirements for patentability in all cases. As a result, there can be no assurance that the Company’s patent applications will result in patents being issued.
While the Company enters into confidentiality and non-disclosure agreements with its employees, consultants, contract manufacturers, customers, potential customers and others to attempt to limit access to, and distribution of, proprietary and confidential information, it is possible that:
•
some or all of its confidentiality agreements will not be honoured;
•
third parties will independently develop equivalent technology or misappropriate the Company’s technology or designs;
•
disputes will arise with the Company’s strategic partners, customers or others concerning the ownership of intellectual property;
•
unauthorized disclosure or use of the Company’s intellectual property, including source code, know-how or trade secrets will occur; or
•
contractual provisions may not be enforceable.
In addition, the Company expends significant resources to patent and manage the intellectual property it creates with the expectation that it will generate revenues by incorporating that intellectual property in its products or services. The Company is also monetizing its patent portfolio through outbound patent licensing. Changes in the law may weaken the Company’s ability to collect royalty revenue for licensing its patents. Similarly, licensees of the Company’s patents may fail to satisfy their obligations to pay royalties, or may contest the scope and extent of their obligations. Finally, the royalties the Company can obtain to monetize its intellectual property may decline because of the evolution of technology, changes in the selling price of products using licensed patents, or the difficulty of discovering infringements.

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Detecting and protecting against the unauthorized use of the Company’s products, technology proprietary rights, and intellectual property rights is expensive, difficult and, in some cases, impossible. Litigation may be necessary in the future to enforce or defend the Company’s intellectual property rights and could result in substantial costs and diversion of management resources, either of which could harm the Company’s business, financial condition and results of operations, and there is no assurance that the Company will be successful.
The Company relies on third parties to manufacture and repair its hardware products.
Although the Company has focused its growth strategy on software and services, it continues to outsource the manufacturing and repair of hardware products to third parties. The resources devoted by these third parties to meet the Company’s manufacturing and repair requirements are not within the Company’s control and there can be no assurance that manufacturing or repair problems will not occur in the future.
The Company’s reliance on outsourcing its manufacturing and repair requirements, directly and indirectly, to third parties may also involve the following risks:
•
failure to satisfy the Company’s requirements on a timely basis, including by failing to meet scheduled production and delivery deadlines;
•
reduced ability to ensure product quality and reliability, and to monitor and manage quality controls;
•
reduced control over costs as third parties procure inventory to build or repair our products;
•
an inability to obtain additional or substitute components or vendors, when and if needed, and on a cost-effective basis;
•
reduced control over the Company’s intellectual property;
•
increased risk of counterfeit and fraudulent activities giving rise to the availability of unauthorized devices;
•
risk of bankruptcy or business interruption on the part of the manufacturer or repair partner; and
•
early termination of, or failure to renew, contractual arrangements.
If the Company’s partners fail to meet the Company’s manufacturing and repair requirements on a timely basis, it could have an adverse effect on the Company’s cost or quality of finished goods and its results of operations.
The Company may not be able to obtain rights to use software or components supplied by third parties.
Many of the Company’s products include intellectual property which must be licensed from third parties. The termination of any of these licenses, or the failure of such third parties to adequately maintain, protect or update their software or intellectual property rights, could delay the Company’s ability to offer its products while the Company seeks to implement alternative technology offered by other sources (which may not be available on commercially reasonable terms) or develop such technology internally (which would require significant unplanned investment on the Company’s part).
In addition, certain software that the Company uses may be subject to open source licenses. Use and distribution of open source software may entail greater risks than use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. Some open source licenses contain requirements that the Company make available source code for modifications or derivative works created by the Company based upon the type of open source software used. If the Company combines its proprietary solutions with open source software in a certain manner, the Company could, under certain of the open source licenses, be required to release the source code of the Company’s proprietary solutions to the public or offer the Company’s solutions to users at no cost. This could allow the Company’s competitors to create similar solutions with lower development effort and time and ultimately could result in a loss of revenue to the Company.
The terms of many open source licenses have not been interpreted by U.S. courts, and there is a risk that such licenses could be construed in a manner that could impose unanticipated conditions or restrictions on the Company’s ability to commercialize its products and services. In such an event, the Company could be required to obtain licenses from third parties in order to continue offering its products and services, to re-engineer the Company’s products or services, or to discontinue the sale of its products and services in the event re-engineering cannot be accomplished on a timely basis, any of which could materially and adversely affect the Company’s business and operating results.
The Company faces substantial asset risk, including the potential for charges related to its long-lived assets and goodwill.
The Company’s long-lived assets include items such as the Company’s network infrastructure and certain intellectual property. As at February 28, 2017, the Company’s long-lived assets had a carrying value of approximately $693 million. Under U.S. GAAP, the Company reviews its long-lived assets for impairment when events or changes in circumstances indicate the carrying value may not be recoverable. The Company’s ability to generate sufficient cash flows to fully recover the current carrying value of these assets depends on the successful execution of its strategies. If it is determined that sufficient future cash flows do not exist to support the current carrying value, the Company will be required to record an impairment charge for long-lived assets in order to adjust the value of these assets to the newly established estimated value.

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Goodwill represents the excess of the acquisition price over the fair value of identifiable net assets acquired. As at February 28, 2017, the Company’s goodwill had a carrying value of approximately $559 million. Under U.S. GAAP, the Company tests goodwill for impairment annually, during the fourth quarter, or more frequently if events or changes in circumstances indicate that the asset may be impaired. 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. If any such events or circumstances arise, the Company may be required to record an impairment charge in the value of its goodwill.
The Company’s ability to maintain or increase its liquidity could be adversely affected by its ability to generate cash flow.
As of the end of fiscal 2017, the Company had cash, cash equivalents and investments of approximately $1.7 billion with $605 million principal amount of outstanding indebtedness as a result of the Debenture Refinancing. The Company generates cash from sales of its products and services and from investment income to fund its operations and investments. The Company’s working capital requirements and cash flows historically have been, and are expected to continue to be, subject to quarterly and yearly fluctuations, depending on such factors as timing and success of new product introductions, levels of sales, returns on the Company’s investment portfolio, timing of deliveries and collection of receivables, inventory levels, capital expenditures, operating expenses, and customer and supplier terms and conditions.
The Company’s ability to maintain or increase its cash flow and working capital could be adversely affected if it is unable to successfully drive adoption of its new products and services or exploit other opportunities for revenue growth. In addition, if the Company fails to accurately predict emerging technological trends and the changing needs of customers and end users, or the features of its new products and services do not meet the expectations or achieve acceptance of its customers, its cash flow, liquidity and financial condition could be materially harmed.
If the Company is unable to maintain or increase its cash balance, it may be required to raise additional funds through the issuance of equity, additional debt or a combination of equity and debt, or may be required to reduce or delay capital expenditures, further reduce costs, reallocate resources within the Company or consider other alternatives. Access to additional capital may not, however, be available on terms acceptable to the Company or at all. Furthermore, any future equity or equity-linked offering could be dilutive to existing shareholders and any drawdown on any future debt financing would require the Company to dedicate a portion of its cash flow to payments on indebtedness, would require the Company to comply with restrictive covenants or to meet certain financial tests, and would limit the Company’s flexibility in planning for, or reacting to, changes in its business. There can be no assurance that the Company’s strategies will be successful or that it will be able to maintain or increase its cash balance.
The Company has incurred indebtedness, which could adversely affect its operating flexibility and financial condition.
The Company has, and may from time to time in the future have, third-party debt service obligations pursuant to its outstanding indebtedness, which currently includes $605 million aggregate principal amount of 3.75% Debentures. The degree to which the Company is leveraged could have important consequences, including:
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the Company’s ability to obtain additional debt financing for working capital, capital expenditures, strategic initiatives or other business purposes in the future may be limited;
•
a portion of the Company’s cash flow from operations or other capital resources will be dedicated to the payment of the principal of, and/or interest on, indebtedness, thereby reducing funds available for working capital, capital expenditures, strategic initiatives or other business purposes;
•
the Company may be more vulnerable to adverse economic and industry conditions as a result of its debt service obligations, including as a result of borrowings at variable rates of interest, which exposes the Company to the risk of increased interest rates;
•
the Company’s flexibility in planning for, or reacting to changes in, its business and industry may be limited; and
•
the Company’s earnings under U.S. GAAP may be negatively affected to the extent that any indebtedness, such as the 3.75% Debentures, are accounted for by the Company at fair value and include embedded derivatives which fluctuate in value from period to period.
The Company’s ability to make scheduled payments of interest on its indebtedness will depend upon its future operating performance and cash flow, which are subject to prevailing economic conditions and financial, competitive, business and other factors, many of which are beyond the Company’s control. If the Company does not have sufficient cash flow from operations, it could result in its inability to pay amounts due under its outstanding indebtedness or to fund other liquidity needs and it may be required to refinance all or part of its then existing indebtedness (including the 3.75% Debentures), sell assets, reduce or delay capital expenditures or seek to raise additional capital, any of which could have a material adverse effect on the Company’s business, results of operations and financial condition.

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The 3.75% Debentures are subject to restrictive and other covenants that may limit the discretion of the Company and its subsidiaries with respect to certain business matters. These covenants place restrictions upon, among other things, the Company’s ability to incur additional indebtedness or provide guarantees in respect of obligations, create liens or other encumbrances, pay dividends, merge or consolidate with another entity and enter into any speculative hedging transaction. A breach of any of these covenants could result in a default under the Company’s outstanding indebtedness, which would have a material adverse effect on the Company’s business, results of operations and financial condition. In addition, certain of the Company’s competitors may operate on a less leveraged basis, or without such restrictive covenants, and therefore could have greater generating and financing flexibility than the Company.
There can be no assurance that the Company will be able to repay, restructure or refinance its indebtedness, including the 3.75% Debentures, as principal amounts become due, or that it will be able to do so on terms as favourable as those currently in place. Any refinancing of the Company’s indebtedness could be at higher interest rates and may require the Company to comply with more onerous covenants, which could further restrict its operations. In addition, the terms of existing or future debt agreements, including the Indenture (as defined below in “Description of Capital Structure - Convertible Debentures”), may restrict the Company from adopting any of these alternatives. Further, upon the occurrence of a Change of Control (as defined in the Indenture), the Company would be obliged to make an offer to purchase the outstanding 3.75% Debentures at a premium, which may require the Company to secure capital. If the Company is unable to refinance its indebtedness, or is only able to refinance indebtedness on less favourable terms, this may have a material adverse effect on the Company’s business, results of operations and financial condition.
The Company could be found to have infringed on the intellectual property rights of others.
Companies in the software and technology industries, including some of the Company’s current and potential competitors, own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. Although the Company believes that third-party software included in the Company’s products is licensed from the entity holding the intellectual property rights and that its products do not infringe on the rights of third parties, third parties have and will continue to assert infringement claims against the Company in the future. The Company may be subject to these types of claims either directly or indirectly through indemnities that it provides to certain of its customers, partners and suppliers against these claims. As the Company continues to develop software products and expand its portfolio using new technology and innovation, its exposure to threats of infringement may increase.
Many intellectual property infringement claims are brought by entities whose business model is to obtain patent-licensing revenues from operating companies such as the Company. Because such entities do not typically generate their own products or services, the Company cannot deter their claims based on counterclaims that they infringe patents in the Company’s portfolio or by entering into cross-licensing arrangements.
Regardless of whether patent or other intellectual property infringement claims against the Company have any merit, they could:
•
adversely affect the Company’s relationships with its customers;
•
be time-consuming and expensive to evaluate and defend, including in litigation or other proceedings;
•
result in negative publicity for the Company;
•
divert management’s attention and resources;
•
cause product delays or stoppages;
•
subject the Company to significant liabilities;
•
require the Company to develop possible workaround solutions that may be costly and disruptive to implement; and
•
require the Company to cease certain activities or to cease selling its products and services in certain markets.
In addition, any such claim may require the Company to enter into costly royalty agreements or obtain a license for the intellectual property rights of third parties. Such licenses may not be available or they may not be available on commercially reasonable terms.
Any of the foregoing infringement claims and related litigation could have a significant adverse impact on the Company’s business and operating results, as well as the Company’s ability to generate future revenues and profits. See also “Legal Proceedings” in this AIF.
Litigation against the Company may result in adverse outcomes.
In the course of its business, the Company receives general commercial claims related to the conduct of its business and the performance of its products and services, including product liability and warranty claims, employment claims and other litigation claims, which may potentially include claims relating to improper use of, or access to, personal data.
In addition, the Company is subject to potential litigation claims arising from its disclosure practices. The Company is committed to providing a high level of disclosure and transparency and provides commentary that highlights the trends and

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uncertainties that the Company anticipates. Given the highly competitive and rapidly evolving mobile communications industry and the ongoing transition in the Company’s business strategy, the Company’s financial results may not follow any past trends, making it difficult to predict the Company’s financial results. Consequently, actual results may differ materially from those expressed or implied by the Company’s forward-looking statements and may not meet the expectations of analysts or investors, which can contribute to the volatility of the market price of the Company’s common shares. Despite the Company’s cautions in each earnings release, earnings conference call and securities filings that contain forward-looking statements, the Company may nevertheless be subject to potential securities litigation or enforcement actions.
Litigation resulting from these claims could be costly and time-consuming and could divert the attention of management and key personnel from the Company’s business operations. The complexity of the technology involved and the inherent uncertainty of commercial, class action, securities, employment and other litigation increases these risks. In recognition of these considerations, the Company may enter into settlements resulting in material expenditures, the payment of which could have a material adverse effect on the Company’s business, results of operation and financial condition. If the Company is unsuccessful in its defense of material litigation claims or is unable to settle the claims, the Company may be faced with significant monetary damages or injunctive relief against it that could have a material adverse effect on the Company’s business, BlackBerry brand, results of operations and financial condition. Administrative or regulatory actions against the Company or its employees could also have a material adverse effect on the Company’s business, BlackBerry brand, results of operations and financial condition. See also “Legal Proceedings” in this AIF.
Government regulations applicable to the Company’s products and services, including products containing encryption capabilities, could negatively impact the Company’s business.
Certain government regulations applicable to the Company’s products and services may provide opportunities for competitors or limit growth. The impact of potential incremental obligations may vary based on the jurisdiction, but regulatory changes could impact whether the Company enters, maintains or expands its presence in a particular market, and whether the Company must dedicate additional resources to comply with these obligations.
Various countries have enacted laws and regulations, adopted controls, license or permit requirements, and restrictions on the export, import, and use of products or services that contain encryption technology. In addition, from time to time, governmental agencies have proposed additional regulations relating to encryption technology, such as requiring certification, notifications, review of source code, or the escrow and governmental recovery of private encryption keys. Governmental regulation of encryption technology, including the regulation of imports or exports, could harm the Company’s sales in one or more jurisdictions and adversely affect the Company’s revenues. Complying with such regulations could also require the Company to devote additional research and development resources to change the Company’s software or services or alter the methods by which the Company makes them available, which could be costly. In addition, failure to comply with such regulations could result in penalties, costs and restrictions on import or export privileges or adversely affect sales to government agencies or government funded projects.
Some of the Company’s competitors do not have the same level of encryption in their technology and some competitors may be subject to less stringent controls on the export, import, and use of encryption technologies in certain markets. Also, several countries have adopted legislation authorizing the circumvention of encryption measures in limited circumstances. These legislative provisions could potentially be used by competitors to attempt to reverse engineer or find vulnerabilities in the Company’s products and services. As a result, these competitors may be able to compete more effectively than the Company can in those markets.
The use and management of user data and personal information could give rise to liabilities as a result of legal, customer and other third-party requirements.
This information is increasingly subject to legislation and regulations in numerous jurisdictions around the world that is intended to protect the privacy and security of personal information, as well as the collection, storage, transmission, use and disclosure of such information.
The interpretation of privacy and data protection laws and their application to the Internet and mobile communications in a number of jurisdictions is unclear and in a state of flux. There is a risk that these laws may be interpreted and applied in conflicting ways from country to country and in a manner that is not consistent with the Company’s current data protection practices. Complying with these varying international requirements could cause the Company to incur additional costs and change the Company’s business practices. In addition, because the Company’s services are accessible worldwide, certain foreign jurisdictions may claim that the Company is required to comply with their laws, even where the Company has no local entity, employees, or infrastructure. Non-compliance could result in penalties or significant legal liability and the Company’s business, results of operations and financial condition may be adversely affected.
The Company’s customers, partners and members of its ecosystem may also have differing expectations or impose particular requirements for the collection, storage, processing and transmittal of user data or personal information in connection with BlackBerry products and services. Such expectations or requirements could subject the Company to additional costs, liabilities

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or negative publicity, and limit its future growth. In addition, governmental authorities may use the Company’s products to access certain personal data of individuals without the Company’s involvement, for example, through so-called lawful intercept capability of network infrastructure. Even a perception that the Company’s products or practices do not adequately protect users’ privacy or data collected by the Company, made available to the Company or stored in or through the Company’s products, or that they are being used by third parties to access personal or consumer data, could impair the Company’s sales or its reputation and brand value.
The Company’s business is subject to risks inherent in foreign operations, including fluctuations in foreign currencies.
Sales outside of North America account for a significant portion of the Company’s revenue. The Company maintains offices in a number of foreign jurisdictions and intends to continue to pursue international market growth opportunities. The Company has limited experience conducting business in some of these jurisdictions and it may not be aware of all the factors that may affect its business in these jurisdictions. The Company is subject to a number of risks associated with its foreign operations that may increase liability and costs, lengthen sales cycles and require significant management attention. These risks include:
•
compliance with the laws of the United States, Canada and other countries that apply to the Company’s international operations, including import and export legislation, lawful access, privacy laws and anti-corruption laws;
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reliance on third parties to establish and maintain foreign operations;
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complications in compliance with, and unexpected changes in, foreign regulatory requirements, including requirements relating to content filtering and requests from law enforcement authorities;
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trading and investment policies;
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consumer protection laws that impose additional obligations on the Company or restrict the Company’s ability to provide limited warranty protection;
•
instability in economic or political conditions, including inflation, recession and actual or anticipated military conflicts, social upheaval or political uncertainty;
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foreign exchange controls and cash repatriation restrictions;
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tariffs and other trade barriers;
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increased credit risk and difficulties in collecting accounts receivable;
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potential adverse tax consequences;
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uncertainties of laws and enforcement relating to the protection of intellectual property or secured technology;
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litigation in foreign court systems;
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cultural and language differences; and
•
difficulty in managing a geographically dispersed workforce in compliance with local laws and customs that vary from country to country.
In addition, the Company is exposed to foreign exchange risk as a result of transactions in currencies other than its U.S. dollar functional currency. The majority of the Company’s revenue and purchases of raw materials are denominated in U.S. dollars. However, some revenue, a substantial portion of operating costs, including salaries and manufacturing overhead, as well as capital expenditures, are incurred in other currencies, primarily Canadian dollars, Euros and British Pounds. If the Canadian dollar appreciates relative to the U.S. dollar, the Company’s Canadian dollar denominated expenses will increase when converted to U.S. dollars for financial reporting purposes. If the Euro depreciates relative to the U.S. dollar, the Company’s Euro denominated revenues will decrease when translated to U.S. dollars for financial reporting purposes. Foreign exchange rate fluctuations may materially affect the Company’s results of operations in future periods. For more details, please refer to the discussion of foreign exchange and income taxes in the Company’s MD&A for the fiscal year ended February 28, 2017.
All of the above factors may have a material adverse effect on the Company’s business, results of operations and financial condition and there can be no assurance that the policies and procedures implemented by the Company to address or mitigate these risks will be successful, that Company personnel will comply with them, or that the Company will not experience these factors in the future.
Errors in the Company’s products and services can be difficult to detect and remedy and could have a material adverse effect on the Company’s business.
The Company’s products and services are highly complex and sophisticated and may contain design defects, bugs or security vulnerabilities that are difficult to detect and correct. Errors may be found in new products or services or improvements to existing products or services after delivery to the Company’s customers. If these errors are discovered, the Company may not be able to successfully correct them in a timely manner or at all. The occurrence of defects, bugs or vulnerabilities in the Company’s products or services could result in the delay or the denial of their market acceptance and may harm the Company’s reputation, and correcting them could require significant expenditures by the Company. In addition, the failure of the Company’s products or services to perform to end user expectations could give rise to product liability and warranty claims, including class action litigations, or to the withdrawal of certifications. The consequences of any such defects, bugs,

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vulnerabilities and claims could have a material adverse effect on the Company’s business, results of operations and financial condition.
The Company’s business could be negatively affected as a result of actions of activist shareholders.
Publicly-traded companies have increasingly become subject to campaigns by investors seeking to advocate certain governance changes or corporate actions such as financial restructuring, special dividends, share repurchases or even sales of assets or the entire company. Activist shareholders have publicly advocated for certain governance and strategic changes at the Company in the past, and the Company could be subject to additional shareholder activity or demands in the future. Given the challenges the Company has encountered in its business in recent years, recent changes to the Company’s governance and strategic focus may not satisfy such shareholders who may attempt to promote or effect further changes, or acquire control over the Company. Responding to proxy contests, media campaigns and other actions by activist shareholders would be costly and time-consuming, disrupt the Company’s operations and would divert the attention of the Board and senior management from the pursuit of its business strategies, particularly its ability to implement its new strategic initiatives, which could adversely affect the Company’s results of operations, financial condition and prospects. If individuals are elected to the Board with a specific agenda to increase short-term shareholder value, it may adversely affect or undermine the Company’s ability to effectively implement its strategic initiatives. Perceived uncertainties as to the Company’s future direction as a result of shareholder activism could also result in the loss of potential business opportunities, and may make it more difficult to attract and retain qualified personnel and business partners.
The Company may not be successful in fostering an ecosystem of third-party application developers.
The Company believes decisions by customers to purchase its products depend in part on the availability and compatibility of software applications and services that are developed and maintained by third-party developers. The Company may not be able to convince third parties to develop and maintain applications for the BlackBerry Secure platform. The loss of, or inability to maintain these developer relationships may materially and adversely affect the desirability of the Company’s products and, hence, the Company’s revenue from the sale of its products.
Failure of the Company’s suppliers, subcontractors, third-party distributors and representatives to use acceptable ethical business practices or to comply with applicable laws could negatively impact the Company’s business.
The Company expects its suppliers, subcontractors, licensees and other partners to operate in compliance with applicable laws, rules and regulations regarding working conditions, labour and employment practices, environmental compliance, anti-corruption, and patent and trademark licensing, as detailed in the Company’s Supplier Code of Conduct. However, the Company does not directly control their labour and other business practices. If one of the Company’s suppliers or subcontractors violates applicable labour, anti-corruption or other laws, or implements labour or other business practices that are regarded as unethical, or if a supplier or subcontractor fails to comply with procedures designed by the Company to adhere to existing or proposed regulations, the delivery of BlackBerry products could be interrupted, orders could be canceled, relationships could be terminated, the Company’s reputation could be damaged, and the Company may be subject to liability. Any of these events could have a negative impact on the Company’s business, results of operations and financial condition.
The Company is subject to risks related to health and safety and hazardous materials usage regulations, and to product certification risks.
The Company must comply with a variety of laws, standards and other requirements governing, among other things, health and safety, hazardous materials usage, packaging and environmental matters, and its products must obtain regulatory approvals and satisfy other regulatory concerns in the various jurisdictions in which they are sold. There can be no assurance that the costs of complying with such laws, standards and requirements will not adversely affect the Company’s business, results of operations or financial condition. Any failure to comply with such laws, standards and requirements may subject the Company to regulatory or civil liability, fines or other additional costs, and reputational harm, and may in severe cases prevent it from selling its products in certain jurisdictions. In addition, any perceived risk of adverse health effects of mobile communication devices could materially adversely affect the Company through litigation or a reduction in sales.
In addition to complying with regulatory requirements, the Company must obtain certain product approvals and certifications from governmental authorities, regulated enterprise customers and network carrier partners. Failure to maintain such approvals or certifications for the Company’s current products or to obtain such approvals or certifications for any new products on a timely basis could have a material adverse effect on the Company’s business, results of operations and financial condition.
There are costs and other burdens associated with regulations regarding conflict minerals.
In fiscal 2015, the SEC adopted new disclosure requirements implementing Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 for issuers that manufacture or contract to manufacture products containing certain minerals that are mined from the Democratic Republic of Congo and adjoining countries. These so-called “conflict minerals” are commonly found in materials used in the manufacture of certain of the Company’s products. The disclosure requirements may limit the sourcing and availability, or may increase the costs, of some of the metals used in the manufacture

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of certain of the Company’s products. The effect may also reduce the number of suppliers who provide conflict-free metals, and may affect the ability of the Company or third party manufacturers to obtain products in sufficient quantities or at competitive prices. Also, since the Company’s supply chain is complex, the Company may face reputational challenges if it is unable to sufficiently verify, through its due diligence procedures, the origins for all metals used in its products or if it discloses that it is unable to determine whether “conflict minerals” are contained in its products.
The Company may lose its foreign private issuer status in the future, which could result in significant additional costs and expenses.
As a foreign private issuer, as defined in Rule 3b-4 under the Exchange Act, the Company is currently exempt from certain of the provisions of the U.S. federal securities laws. For example, the U.S. proxy rules and the Section 16 reporting and “short swing” profit rules do not apply to foreign private issuers. To be considered a foreign private issuer, a company must satisfy a United States shareholder test (less than 50% of the voting securities of a company must be held by residents of the United States) or a three part business contacts test. A substantial number of the outstanding voting securities of the Company are directly or indirectly held of record by residents of the United States. If the Company loses its status as a foreign private issuer, these regulations would apply and it would also be required to commence reporting on forms required of U.S. domestic companies, such as Forms 10-K, 10-Q and 8-K, rather than the forms currently available to the Company, such as Forms 40-F and 6-K. Compliance with the additional disclosure and timing requirements under these securities laws would likely result in increased expenses and would require the Company’s management to devote substantial time and resources to comply with new regulatory requirements. The Company would also no longer be able to utilize the significant benefits afforded by the U.S./Canada multijurisdictional disclosure system, which generally permits eligible Canadian companies to use Canadian disclosure documents to satisfy continuous reporting requirements in both Canada and the United States, and allows Canadian companies to make offers and sales of securities to the public in the United States using a Canadian prospectus that is subject to review by the principal Canadian regulator, thereby avoiding the costs and delays associated with duplicative and sometimes conflicting regulatory requirements. In addition, the Company would not be able to benefit from certain exemptions available to foreign private issuers that it has used in the past, including its ability to comply with the rules of the TSX in lieu of certain NASDAQ listing requirements.
Copyright levies in numerous countries for the sale of products may negatively impact the Company’s business.
The Company faces the possibility of copyright levies from collecting societies in European and other countries for the sale of certain BlackBerry products that might be used for the private copying of copyright protected works. The collecting societies argue that copyright levies should apply to such products because they include audio/video recording functionality, such as an MP3 player or storage capability, despite the fact that such products are not primarily intended to act as a recording device. If these levies are imposed, the Company’s financial results may be negatively impacted. Furthermore, the Company may be required to pay copyright levies on products and services used by consumers to copy or stream copyrighted works. Non-compliance with these legal requirements could result in fines, imprisonment of local executives, and sanctions on the import and/or use of the Company’s products or services.
Tax provision changes, the adoption of new tax legislation or exposure to additional tax liabilities could materially impact the Company’s financial condition.
The Company is subject to income, indirect (such as sales tax, sales and use tax and value-added tax) and other taxes in Canada and numerous foreign jurisdictions. Significant judgment is required in determining its worldwide liability for income, indirect and other taxes, as well as potential penalties and interest. In the ordinary course of the Company’s business, there are many transactions and calculations where the ultimate tax determination is uncertain. Although the Company believes that its tax estimates are reasonable, there can be no assurance that the final determination of any tax audits will not be materially different from that which is reflected in historical income, indirect and other tax provisions and accruals. Should additional taxes or penalties and interest be assessed as a result of an audit, litigation or changes in tax laws, there could be a material adverse effect on the Company’s current and future results and financial condition. In addition, there is a risk of recoverability of future deferred tax assets.
The Company’s future effective tax rate will depend on the relative profitability of the Company’s domestic and foreign operations, the statutory tax rates and taxation laws of the related tax jurisdictions, the tax treaties between the countries in which the Company operates, the timing of the release, if any, of the valuation allowance, and the relative proportion of research and development incentives to the Company’s profitability.

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The Company expects its quarterly revenue and operating results to fluctuate.
The Company’s revenues can change from one quarter to the next, including due to unexpected developments late in a quarter, such as lower-than-anticipated demand for the Company’s products and services, issues with new product or service introductions, an internal systems failure, or challenges with one of the Company’s distribution channels or other partners (including licensees and manufacturers).
Gross margins on the Company’s products and services vary across product lines and can change over time as a result of product transitions, pricing and configuration changes, and cost fluctuations. In addition, the Company’s gross margin and operating margin percentages, as well as overall profitability, may be materially adversely impacted as a result of a shift in product/service, geographic or channel mix, component cost increases, price competition, or the introduction of new products and services, including those that have higher cost structures or reduced pricing.
The market price of the Company’s common shares is volatile.
The market price of the Company’s outstanding common shares has been and continues to be volatile, due in part to uncertainty relating to the Company’s ability to implement and realize the benefits of its ongoing strategic initiatives. The market price of the Company’s shares may fluctuate significantly in response to the risks described elsewhere in these Risk Factors, as well as numerous other factors, many of which are beyond the Company’s control, including: (i) announcements by the Company or its competitors of new products and services, acquisitions, customer wins or strategic partnerships; (ii) forward-looking financial guidance provided by the Company, any updates to this guidance, or the Company’s failure to meet this guidance; (iii) quarterly and annual variations in operating results, which are difficult to forecast, and the Company’s financial results not meeting the expectations of analysts or investors; (iv) recommendations by securities analysts or changes in earnings estimates; (v) the performance of other technology companies or the increasing market share of such companies; (vi) results of existing or potential litigation; (vii) trading volume; or (viii) market rumours.
In addition, broad market and industry factors may decrease the market price of the Company’s common shares, regardless of the Company’s operating performance. The stock market in general, and the securities of technology companies in particular, have often experienced extreme price and volume fluctuations. Periods of volatility in the overall market and in the market price of the Company’s securities may prompt securities class action litigation against the Company which, if not resolved swiftly, can result in substantial costs and a diversion of management’s attention and resources. See also the Risk Factor entitled “Litigation against the Company may result in adverse outcomes” and the “Legal Proceedings” section in this AIF.
Adverse economic and geopolitical conditions may negatively affect the Company.
A slowdown in capital spending by end users of the Company’s products and services, coupled with existing economic and geopolitical uncertainties globally and in the Company’s target vertical markets, could substantially reduce the demand for the Company’s products and services and adversely affect the Company’s business, results of operations and financial condition.
Current and future conditions in the domestic and global economies remain uncertain, and it is difficult to estimate the level of economic activity for the economy as a whole. It is even more difficult to estimate growth in various parts of the economy, including the markets in which the Company participates. Because all components of the Company’s budgeting and forecasting are dependent upon estimates of economic activity in the markets that the Company serves and demand for its products and services, economic uncertainties make it difficult to estimate future income and expenditures.
If economic or geopolitical uncertainties cause customers to reduce their IT budgets or to reduce or cancel orders for the Company’s products and services, the Company’s business, results of operations and financial condition may be adversely affected.
In addition, acts of terrorism and the outbreak of hostilities and armed conflicts within or between countries have created and may continue to create uncertainties that may affect the global economy and could have a material adverse effect on the Company’s business, results of operations and financial condition.
A significant portion of the Company’s assets are held in cash, cash equivalents, and short-term or long-term investments, all of which are subject to market and credit risk.
The Company had total cash, cash equivalents and investments of $1.7 billion as at February 28, 2017, compared to $2.6 billion as at February 29, 2016. Cash equivalents, short term and other investments are invested primarily in debt securities of varying maturities. Consequently, the Company is exposed to interest rate risk and its results of operations may be adversely affected by changes in interest rates. The fair value of short term and other investments, as well as the investment income derived from the investment portfolio, will fluctuate with changes in prevailing interest rates.
Additionally, the Company is exposed to credit risk on its investment portfolio. While the Company’s investment policies include investing in liquid, investment-grade securities and limiting investments in any single issuer, there can be no assurance that such investment policies will reduce or eliminate market or credit risks. See “Market Risk of Financial Instruments” in the

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Company’s MD&A for the fiscal year ended February 28, 2017 for a discussion of credit risk related to the Company’s investment portfolio.
Future issuances of common shares by the Company, including upon any conversion of the 3.75% Debentures, will be dilutive to existing shareholders.
The Company is authorized to issue an unlimited number of voting common shares, an unlimited number of non-voting Class A common shares and an unlimited number of preferred shares issuable in series on terms and conditions established by the Board, generally without the approval of shareholders. Existing shareholders have no pre-emptive rights in connection with such further issues. During fiscal 2017, the Company issued $605 million aggregate principal amount of 3.75% Debentures, which may be converted at the holders’ option for up to 60,500,000 common shares (subject to adjustment in certain circumstances). If the 3.75% Debentures were converted in full as at February 28, 2017, the common shares issued would represent approximately 10.2% of the Company’s then outstanding common shares. Subject to TSX and NASDAQ rules requiring shareholder approval, the Company may make future acquisitions or enter into financings or other transactions involving the issuance of common shares or securities convertible into common shares, which may be dilutive to existing shareholders. Sales or issuances of substantial numbers of common shares, or the perception that such sales could occur, may adversely affect prevailing market pricing for the Company’s common shares.
There could be adverse tax consequences for the Company’s shareholders in the United States if the Company is or was a passive foreign investment company.
Under U.S. federal income tax laws, if a company is, or for any past period was, a passive foreign investment company (“PFIC”), there could be adverse U.S. federal income tax consequences to U.S. shareholders even if the Company is no longer a PFIC. The determination of whether the Company is a PFIC is a factual determination made annually based on various facts and circumstances and thus is subject to change, and the principles and methodology used in determining whether a company is a PFIC are subject to interpretation. While the Company does not believe that it is currently or has been a PFIC, there can be no assurance that the Company was not a PFIC in the past and will not be a PFIC in the future. U.S. shareholders are urged to consult their tax advisors concerning U.S. federal income tax consequences of holding the Company’s common shares if the Company is or has been considered a PFIC.
DIVIDEND POLICY AND RECORD
The Company has not paid any cash dividends on its common shares during the last three fiscal years. The Company will consider paying dividends on its common shares in the future when circumstances permit, having regard to, among other things, the Company’s earnings, cash flows and financial requirements, as well as relevant legal and business considerations.
DESCRIPTION OF CAPITAL STRUCTURE
The Company’s authorized share capital consists of an unlimited number of voting common shares without par value, an unlimited number of non-voting, redeemable, retractable class A common shares without par value, and an unlimited number of non-voting, cumulative, redeemable, retractable preferred shares without par value, issuable in series. Only common shares are issued and outstanding.
Common Shares
Each common share is entitled to one vote at meetings of the shareholders and to receive dividends if, as and when declared by the Board. Dividends which the Board determines to declare and pay shall be declared and paid in equal amounts per share on the common shares and class A common shares at the time outstanding without preference or distinction. Subject to the rights of holders of shares of any class of share ranking prior to the common shares and class A common shares, holders of common shares and class A common shares are entitled to receive the Company’s remaining assets ratably on a per share basis without preference or distinction in the event that it is liquidated, dissolved or wound-up.
Class A Common Shares
The holders of class A common shares are not entitled to receive notice of, or attend or vote at, any meeting of the Company’s shareholders, except as provided by applicable law. Each such holder is entitled to receive notice of, and to attend, any meetings of shareholders called for the purpose of authorizing the dissolution or the sale, lease or exchange of all or substantially all of the Company’s property other than in the ordinary course of business and, at any such meeting, shall be entitled to one vote in respect of each class A common share on any resolution to approve such dissolution, sale, lease or exchange. Dividends are to be declared and paid in equal amounts per share on all the common shares and the class A common shares without preference or distinction. Subject to the rights of holders of any class of share ranking prior to the common shares and class A common shares, in the event that the Company is liquidated, dissolved or wound-up, holders of common shares and class A common shares are entitled to receive the remaining assets ratably on a per share basis without preference or distinction.
The Company authorized for issuance the class A common shares when the Company was a private company to permit employees to participate in equity ownership. Class A common shares previously issued by the Company to such employees were converted on a one-for-one basis into common shares in December 1996. At this time, the Company has no plans to issue further class A common shares.
Preferred Shares
The holders of preferred shares are not entitled to receive notice of, or to attend or vote at, any meeting of the Company’s shareholders, except as provided by applicable law. Preferred shares may be issued in one or more series and, with respect to the payment of dividends and the distribution of assets in the event that the Company is liquidated, dissolved or wound-up, rank prior to the common shares and the class A common shares. The Board has the authority to issue series of preferred shares and determine the price, number, designation, rights, privileges, restrictions and conditions, including dividend rights, of each series without any further vote or action by shareholders. The holders of preferred shares do not have pre-emptive rights to subscribe to any issue of the Company’s securities. At this time there are no preferred shares outstanding and the Company has no plans to issue any preferred shares.

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Convertible Debentures
Debenture Refinancing
In fiscal 2014, the Company issued $1.25 billion of 6% Debentures in a private placement. The Company had an option to redeem the 6% Debentures after November 13, 2016 at specified redemption prices in specified periods. On August 26, 2016, the Company announced that, with the approval of the holders of the 6% Debentures, the indenture governing the 6% Debentures had been amended to permit optional redemption by the Company prior to November 13, 2016. On September 2, 2016, the Company redeemed all of the outstanding 6% Debentures for an aggregate redemption amount of approximately $1.33 billion.
On September 7, 2016, the Company issued the 3.75% Debentures in an aggregate principal amount of $605 million, which replaced the 6% Debentures in part. The following is a summary of the material attributes and characteristics of the 3.75% Debentures. This summary does not purport to be complete and is subject to, and qualified in its entirety by, the terms of the Indenture (as defined below). Reference is made to the Indenture, which contains the complete description of the 3.75% Debentures, and which has been filed on SEDAR at www.sedar.com and with the SEC at www.sec.gov.
General
The 3.75% Debentures are direct, unsecured debt obligations of the Company and are issued under an indenture (the “Indenture”) dated as of September 7, 2016 between the Company, as issuer, BlackBerry Corporation, BlackBerry UK Limited, BlackBerry Singapore Pte. Limited, Good Technology Corporation and QNX Software Systems Limited as guarantors (collectively, the “Guarantors”) and BNY Trust Company of Canada, as trustee (the “Trustee”). The 3.75% Debentures are limited in the aggregate principal amount of $605,000,000.
The 3.75% Debentures have a maturity date of November 13, 2020 (the “Maturity Date”), subject to the prior conversion or payment thereof as provided by the Indenture.
Each of the Guarantors has separately guaranteed the payment of principal, premium (if any) and interest and other amounts due under the 3.75% Debentures, and the performance of all other obligations of the Company under the Indenture (the “Guarantees”). Other significant subsidiaries of the Company may be required to provide such Guarantees where they satisfy certain financial tests.
Interest
The 3.75% Debentures bear interest at a rate of 3.75% per annum, payable in equal quarterly instalments in arrears on the first day of March, June, September and December of each year. If an Event of Default (as defined below) has occurred and is continuing, the 3.75% Debentures will bear interest at a rate of 7.75% per annum during the period of the default.
Subordination
The 3.75% Debentures rank pari passu with one another, in accordance with their tenor without discrimination, preference or priority and, subject to statutory preferred exceptions, shall rank equally with all other present and future unsubordinated unsecured Indebtedness (as defined below) of the Company, other than the Specified Senior Indebtedness (as defined below) of the Company and the Guarantors. No payments shall be made on account of the 3.75% Debentures during any default of payment when due of any principal, interest or other amount owing with respect to Specified Senior Indebtedness, unless such Specified Senior Indebtedness shall first have been paid in full or provided for. The Trustee, on behalf of the holders of 3.75% Debentures (the “Holders”), may from time to time enter into subordination agreements with Senior Creditors (as defined below) to reflect the relative priorities of the Holders and such Senior Creditors.
Conversion Privilege
Each Holder shall have the right at its option to convert each $1,000 principal amount of its 3.75% Debentures into common shares at any time prior to the third business day prior to the Maturity Date. Common shares will be issued based on an initial conversion price of $10.00 principal amount of 3.75% Debentures per share (the “Conversion Price”), subject to adjustment in certain circumstances.
No Redemption
The 3.75% Debentures are not redeemable at the option of the Company prior to the Maturity Date.
Change of Control
If a change of control of the Company occurs involving: (i) the acquisition by any person or groups of persons acting jointly or in concert, directly or indirectly, in a single transaction or a series of related transactions, of voting control or direction over more than 35% of the then-outstanding common shares; (ii) the acquisition by any person (other than the Company or any of

32


the Guarantors) or one or more members of a group of persons acting jointly or in concert (other than a group consisting solely of two or more of the Company and any of the Guarantors), directly or indirectly, in a single transaction or a series of related transactions, of all or substantially all of the assets of the Company and its subsidiaries, taken as a whole; or (iii) the completion of a merger, amalgamation, arrangement or similar transaction which results in holders of the Company’s common shares immediately prior to the completion of the transaction holding less than 50% of the then outstanding common shares of the resulting entity after the completion of the transaction (a “Change of Control”), the Company is required to make an offer (a “Repayment Offer”) to purchase all or, at the option of the Holders, a portion (in integral multiples of $1,000) of the principal amount of the 3.75% Debentures held by such Holders, at a price equal to 115% of the principal amount thereof plus accrued and unpaid interest, if any, to but excluding the Change of Control Repurchase Date (as defined in the Indenture) (the “Change of Control Repurchase Price”). The Company is not required to make that Repayment Offer to Fairfax Financial Holdings Limited (“Fairfax”) or its affiliates, or any of their joint actors, if they caused such a Change of Control. Any 3.75% Debentures so repurchased will be cancelled and may not be reissued or resold.
Certain Covenants
The Company is bound by certain covenants under the Indenture. Positive covenants include: (i) payment of the Trustee’s remuneration; (ii) maintenance of corporate existence and books of account; and (iii) payment of principal, premium (if any) and interest on the 3.75% Debentures when due and payable. Reporting covenants include: (i) provision of an annual compliance certificate regarding compliance with the terms of the Indenture and confirming that no Events of Default have occurred under the Indenture; (ii) provision of notice of an Event of Default or any event which, with the passing of time or giving of notice, would constitute an Event of Default; and (iii) provision of public disclosure documents to the Trustee or Holders in certain circumstances. Subject to customary exceptions, negative covenants include: (i) no liens on assets of the Company or its subsidiaries, except Permitted Liens (as defined in the Indenture, which include customary liens arising by operation of law, liens securing Specified Senior Indebtedness, Purchase Money Security Interests (as defined below) securing permitted Indebtedness, liens on real property incurred in connection with a sale and leaseback of permitted Indebtedness, and any other lien not prohibited by the Company’s asset-backed lending facility (now terminated), subject to compliance with restrictions on incurring Indebtedness); (ii) a limitation on amalgamations and mergers except in compliance with customary successor entity provisions; and (iii) a limitation on dividends, dividend increases and speculative hedging transactions.
The Company and its subsidiaries are restricted, without consent of Holders of 66-2/3% of the outstanding 3.75% Debentures, from incurring any indebtedness or permitting any indebtedness to be outstanding, other than:
(a)
the 3.75% Debentures and the Guarantees;
(b)
Specified Senior Indebtedness in an aggregate principal amount at any one time outstanding not to exceed $550,000,000;
(c)
Indebtedness in an aggregate principal amount at any one time outstanding not to exceed $450,000,000, comprised of:
(i)
Indebtedness secured by a Purchase Money Security Interest including Capital Leases (as defined below);
(ii)
Indebtedness incurred in connection with a sale and leaseback of real property;
(iii)
Indebtedness incurred under a securitization or factoring of receivables;
(iv)
Indebtedness of any subsidiary acquired by the Company or its subsidiaries that existed prior to such acquisition and not incurred in contemplation of such acquisition;
(v)
Indebtedness incurred to finance insurance premiums;
(vi)
other Indebtedness (other than Specified Senior Indebtedness) provided that such Indebtedness shall be unsecured; or
(vii)
Indebtedness incurred to refinance any Indebtedness referred to in clauses (i) through (iv) above.
Events of Default
The Indenture provides for such events of default as are customary for indebtedness of this type (each, an “Event of Default”) including: (i) a default in payment of any principal amount, purchase price or any Change of Control Repurchase Price when due; (ii) a default in payment of interest on any 3.75% Debentures when due and the continuance of such default for 10 days; (iii) a default in maintaining the Company’s reporting issuer status or the listing of the common shares, or in providing an opinion in respect of new Guarantors, and the continuance of such default for five business days; (iv) a default in the delivery of common shares or cash due upon conversion of 3.75% Debentures, and the continuance of such default for three business days; (v) a default by the Company or any Guarantor in performing or observing any of the other covenants, agreements or material obligations of the Company or the Guarantor under the Indenture, and the continuance of such default for 30 days after written notice to the Company by the Trustee or by the Holders of not less than 25% in principal amount of outstanding 3.75% Debentures requiring the same to be remedied; (vi) the failure to make a Repayment Offer following the occurrence of a Change of Control; (vii) certain events of bankruptcy or insolvency with respect to the Company or any Guarantor; (viii) any of

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the Guarantees being held in any judicial proceeding to be unenforceable or invalid or ceasing for any reason to be in full force and effect or any Guarantor, or any person acting on behalf of a Guarantor, denying or disaffirming its obligations under its Guarantee; (ix) (A) if the Company or any Guarantor is in default (as principal or as guarantor or other surety) in the payment of any principal of or premium or make-whole amount on any Indebtedness that is outstanding in an aggregate principal amount of more than $50,000,000 (or its equivalent in the relevant currency of payment) beyond any period of grace provided with respect thereto, or (B) if the Company or any Guarantor is in default in the performance of or compliance with any term of any evidence of any Indebtedness in an aggregate outstanding principal amount of more than $50,000,000 (or its equivalent in the relevant currency of payment) or of any mortgage, indenture or other agreement relating thereto or any other condition exists, and in each case as a consequence of such default or condition such Indebtedness has become or has been declared due and payable before its stated maturity or before its regularly scheduled dates of payment, or (C) as a consequence of the occurrence or continuation of any event or condition (other than (a) the passage of time or (b) the right of the holder of Indebtedness to convert such Indebtedness into equity interests or (c) any mandatory prepayment provisions in an agreement governing Indebtedness unless such provisions also require the permanent prepayment of all Indebtedness then outstanding and, if applicable, the permanent cancellation of all other amounts available to be borrowed under such agreement), the Company or any Guarantor has become obligated to purchase or repay Indebtedness (including any Specified Senior Indebtedness but excluding the 3.75% Debentures) before its regular maturity or before its regularly scheduled dates of payment in an aggregate outstanding principal amount of more than $50,000,000 (or its equivalent in the relevant currency of payment); and (x) if the Company or any of its subsidiaries fails to pay final judgments aggregating in excess of an amount greater than $50,000,000 in cash (net of any amounts for which an insurance company is liable) rendered against the Company or any of its subsidiaries by a court of competent jurisdiction, which judgments are not paid, discharged or stayed for a period of 30 days after such judgments become final and non-appealable.
If an Event of Default has occurred and is continuing (other than an Event of Default due to an event of bankruptcy or insolvency), the Trustee may, in its discretion, and shall, at the written request of Holders of not less than 25% of the aggregate principal amount of the 3.75% Debentures then outstanding, declare the principal of (and premium, if any), together with accrued interest on all outstanding 3.75% Debentures to be immediately due and payable. If an Event of Default due to an event of bankruptcy or insolvency occurs, the principal of (and premium, if any), together with accrued interest on all outstanding 3.75% Debentures will immediately become due and payable without any action on the part of the Trustee or any Holders of 3.75% Debentures. The Holders of more than 66-2/3% of the principal amount of outstanding 3.75% Debentures may, on behalf of the Holders of all outstanding 3.75% Debentures, waive an Event of Default in the manner set forth below under “Modification or Waiver”.
Modification or Waiver
The rights of the Holders may be modified or waived in accordance with the terms of the Indenture. For that purpose, among others, the Indenture contains certain provisions which will make binding on all Holders resolutions passed at meetings of the Holders (which may be called by the Company or the Trustee upon not less than 21 days’ notice) by votes cast thereat by Holders of not less than 66-2/3% including waivers for certain events of default, or in the case of Extraordinary Resolutions (as defined in the Indenture) and waivers of certain defaults in payment or delivery of shares not less than 85%, of the aggregate principal amount of the 3.75% Debentures present at the meeting or represented by proxy, provided that a quorum for all meetings of Holders of 3.75% Debentures will be at least 25% of the aggregate principal amount of outstanding 3.75% Debentures represented in person or by proxy, or rendered by instruments in writing signed by the Holders of not less than 66-2/3%, or in the case of Extraordinary Resolutions not less than 85%, of the aggregate principal amount of the 3.75% Debentures then outstanding. In addition, without the approval of Holders by Extraordinary Resolution, the Indenture may not be amended to: (i) alter the manner of calculation of or rate of accrual of interest on the 3.75% Debentures or change the time of payment; (ii) make the 3.75% Debentures convertible into securities other than common shares; (iii) change the Maturity Date or any instalment of interest on the 3.75% Debentures; (iv) reduce the principal amount or Change of Control Repurchase Price with respect to the 3.75% Debentures; (v) make any change that adversely affects the rights of Holders to require the Company to purchase the 3.75% Debentures at the option of Holders; (vi) impair the right to institute suit for the enforcement of payments or the conversion of the 3.75% Debentures; (vii) change the currency of payment of principal of, or interest on, the 3.75% Debentures; (viii) except as contemplated by the Indenture, change the Conversion Price or otherwise adversely affect the Holders’ conversion rights; (ix) release any of the Guarantors from any of their obligations under a Guarantee provided for in the Indenture, except in accordance with the Indenture; or (x) change the provisions in the Indenture that relate to modifying or amending the Indenture.
Defined Terms
In the foregoing summary, the following terms have the meanings set forth below:
“Capital Lease” means, with respect to any Person (as defined in the Indenture), any lease of any property (whether real, personal or mixed) by such Person as lessee that, in accordance with U.S. GAAP (as in effect on the date of the Indenture), is required to be classified and accounted for as a capital lease on a balance sheet of such Person;

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“Indebtedness” means, with respect to a person, and without duplication:
(a)
indebtedness of such person for monies borrowed or raised, including any indebtedness represented by a note, bond, debenture or other similar instrument of such person;
(b)
reimbursement obligations of such person arising from bankers’ acceptance, letters of credit or letters of guarantee or similar instruments;
(c)
indebtedness of such person for the deferred purchase price of property or services, other than for consumable non-capital goods and services purchased in the ordinary course of business, including arising under any conditional sale or title retention agreement, but excluding for greater certainty ordinary course accounts payable;
(d)
obligations of such person under or in respect of Capital Leases, synthetic leases, Purchase Money Security Interests or sale and leaseback transactions;
(e)
the aggregate amount at which shares in the capital of such person that are redeemable at fixed dates or intervals or at the option of the holder thereof may be redeemed; and
(f)
guarantees or liens granted by such person in respect of Indebtedness of another person;
“Purchase Money Security Interest” means a lien created or incurred by the Company or one of its subsidiaries securing Indebtedness incurred to finance the acquisition of property (including the cost of installation thereof), provided that (i) such lien is created substantially simultaneously with the acquisition of such property, (ii) such lien does not at any time encumber any property other than the property financed by such Indebtedness, (iii) the amount of Indebtedness secured thereby is not increased subsequent to such acquisition, and (iv) the principal amount of Indebtedness secured by any such lien at no time exceeds 100% of the original purchase price of such property and the cost of installation thereof, and for the purposes of this definition the term “acquisition” includes a Capital Lease;
“Senior Creditor” means a holder or holders of Specified Senior Indebtedness and includes any representative or representatives or trustee or trustees of any such holder or holders; and
“Specified Senior Indebtedness” means, without duplication, such Indebtedness as the Company shall designate as “Specified Senior Indebtedness” by notice to the Trustee in writing; provided that the aggregate principal amount of Specified Senior Indebtedness shall not exceed $550,000,000 at any one time outstanding; provided, further, that all Specified Senior Indebtedness must constitute:
(a)
Indebtedness referred to in paragraphs (a) and (b) of the definition of Indebtedness above;
(b)
renewals, extensions, restructurings, refinancings and refundings of any such Indebtedness; and
(c)
guarantees of any of the foregoing.
MARKET FOR SECURITIES OF THE COMPANY
The Company’s common shares are listed and posted for trading on the TSX under the symbol “BB” and are listed on NASDAQ under the symbol “BBRY”. The volume of trading and price ranges of the Company’s common shares on the TSX and NASDAQ during the previous fiscal year are set out in the following table:
 
Common Shares – TSX
 
Common Shares – NASDAQ
Month
Price Range
(CDN $)
 
Average Daily
Volume
 
Price Range
(US $)
 
Average Daily
Volume
March 2016
$9.87-$11.09
 
1,400,592

 
$7.43-$8.36
 
4,933,441

April 2016
$8.78-$10.10
 
1,432,870

 
$6.93-$7.73
 
6,033,613

May 2016
$8.36-$9.57
 
1,072,356

 
$6.50-$7.32
 
3,508,086

June 2016
$8.15-$9.61
 
1,298,090

 
$6.23-$7.49
 
4,156,533

July 2016
$8.27-$10.18
 
1,222,163

 
$6.35-$7.74
 
4,068,284

August 2016
$9.93-$10.67
 
922,541

 
$7.57-$8.30
 
4,010,249

September 2016
$9.45-$11.18
 
1,208,776

 
$7.15-$8.46
 
4,650,368

October 2016
$9.39-$10.59
 
926,070

 
$7.00-$8.02
 
3,403,636

November 2016
$9.32-$10.50
 
982,160

 
$6.93-$7.83
 
4,076,808

December 2016
$9.21-$10.78
 
1,441,751

 
$6.86-$8.05
 
6,999,079

January 2017
$9.08-$9.69
 
912,780

 
$6.86-$7.35
 
3,195,503

February 2017
$9.06-$9.87
 
806,630

 
$6.93-$7.52
 
3,315,054



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In addition, the 6% Debentures were listed on the TSX from May 2014 until their redemption on September 2, 2016 under the symbol “BB.DB.U”. There was limited trading in the 6% Debentures. During fiscal 2017, an aggregate of $30,549,138 principal amount of 6% Debentures was traded on only 23 days on the TSX, at prices ranging from $103.50 to $115.00 per $100 principal amount.

The 3.75% Debentures have been listed on the TSX since January 2017, under the symbol “BB.DB.V”. There is limited trading in the 3.75% Debentures. During fiscal 2017, an aggregate of $6,120,000 principal amount of 3.75% Debentures was traded on only one day on the TSX at a price of $102.00 per $100 principal amount.

NORMAL COURSE ISSUER BID
The normal course issuer bid commenced by the Company on June 29, 2015 expired on June 28, 2016. During fiscal 2016, the Company repurchased for cancellation 12,606,978 common shares at a cost of approximately $93 million. No common shares of the Company were repurchased during fiscal 2017.
On August 4, 2016, the Company announced a normal course issuer bid to purchase up to $125 million principal amount of the 6% Debentures. During the second quarter of fiscal 2017, the Company repurchased and canceled approximately $5.0 million principal amount of 6% Debentures for approximately $5.3 million. The balance of the outstanding 6% Debentures was redeemed by the Company on September 2, 2016.
DIRECTORS AND EXECUTIVE OFFICERS
As at the date hereof, the Company currently has a Board comprised of eight persons. Pursuant to a special resolution of shareholders, the directors are authorized from time to time to increase the size of the Board and to fix the number of directors, up to the maximum of 15 persons, as currently provided under the articles of the Company, without the prior consent of the shareholders.
The Board has determined that each member of the Board except Mr. Chen is “independent” under the NASDAQ rules and applicable securities law requirements.
The Company made one executive officer appointment during fiscal 2017, naming Steven Capelli as Chief Financial Officer.
The following table sets forth the name, province or state, and country of residence of each director and executive officer of the Company and their respective positions and offices held with the Company and their principal occupations during the last five years. Each director is elected at the annual meeting of shareholders to serve until the next annual meeting or until a successor is elected or appointed.
Name and Residence
 
Current Position with Company
 
Principal Occupation During the Last Five Years (other than Current Position with Company)
John S. Chen
California, USA

 
Chief Executive Officer; Executive Chair/Director (since 2013)
 
Chief Executive Officer, President and Chairman, Sybase (1998 to 2012)
Michael Daniels(1)
Virginia, USA

 
Director (since 2014)
 
Chairman, Logistics Management Institute (2011 to present); Chairman, Invincea (2011 to present); and Chairman, Globallogic (2007 to 2013)
Timothy Dattels(2)
California, USA

 
Director (since 2012)
 
Senior Partner, TPG Capital (current)
Richard Lynch(1)
Pennsylvania, USA

 
Director (since 2013)
 
President, FB Associates, LLC (current)
Laurie Smaldone Alsup(2)
New Jersey, USA

 
Director (since 2015)
 
Chief Operating Officer and Chief Scientific Officer, NDA Group (2016 to present); President and Chief Scientific Officer, PharmApprove (2011 to 2016)
Barbara Stymiest, FCPA, FCA(1)(2)
Ontario, Canada

 
Director (since 2007)
 
Corporate Director (current)

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V. Prem Watsa(1) 
Ontario, Canada

 
Lead Director (since 2013)(3)
 
Chief Executive Officer, Fairfax (current)
Wayne Wouters(2) 
Ontario, Canada

 
Director (since 2015)
 
Strategic and Policy Advisor, McCarthy Tétrault LLP (2015 to present); Clerk of the Privy Council of Canada (2009 to 2014)
Marty Beard California, USA
 
Chief Operating Officer
 
Chairman and Chief Executive Officer of LiveOps (2011 to 2014)
Steven Capelli
California, USA
 
Chief Financial Officer
 
Corporate Director (2013 to 2016); President, Worldwide Field Operations, Sybase (1997 to 2012)
Sandeep Chennakeshu Texas, USA
 
President, BlackBerry Technology Solutions
 
President, PMP LLC (2012 to 2014); Owner, RSI Consulting LLC (2013 to 2014); Senior Advisor to CEO of Sony Corporation of America (2010 to 2012)
Sai Yuen (Billy) Ho
California, USA

 
Executive Vice
President, Enterprise
Products and Value
Added Solutions
 
Senior Vice President and General Manager, Sybase (2009 to 2012)

Nita White-Ivy California, USA
 
Executive Vice President, Human Resources
 
Chief People Officer, SuccessFactors (2012 to 2013); Vice President, Worldwide Human Resources, Sybase (1998 to 2012)
Carl Wiese
Texas, USA
 
President, Global Sales
 
Senior Vice President, Global Collaboration Sales, Cisco Systems (2009 to 2015)
Steve Zipperstein
California, USA

 
Chief Legal Officer & Corporate Secretary
 
 
Notes:
1
Member of the Compensation, Nomination and Governance Committee (Chair - V. Prem Watsa).
2
Member of the Audit and Risk Management Committee (Chair - Barbara Stymiest).
3
Mr. Watsa first joined the Company as a director in January 2012, but then resigned on August 13, 2013 in connection with the formation of the Special Committee to explore strategic alternatives and rejoined the Company as a director in November 2013.
The Board has two active standing committees: an Audit and Risk Management Committee and a Compensation, Nomination and Governance Committee, the members of which are noted above.
As at February 28, 2017, the above directors and executive officers of the Company beneficially owned, or controlled or directed, directly or indirectly, 3,290,652 common shares of the Company representing approximately 0.62% of the issued and outstanding common shares of the Company. In addition, as of such date, Fairfax and certain of its wholly-owned or controlled subsidiaries beneficially owned approximately 46,724,700 common shares of the Company (the “Fairfax Shares”) representing approximately 8.81% of the issued and outstanding common shares of the Company, or 96,724,700 common shares of the Company representing approximately 16.6% of the issued and outstanding common shares of the Company assuming conversion of all of its 3.75% Debentures and after giving effect to the conversion. Mr. Watsa, a director of the Company, is the Chairman and Chief Executive Officer of Fairfax and may be deemed under applicable U.S. securities laws to beneficially own the Fairfax Shares by virtue of his position at Fairfax.

37


Cease Trade Orders, Bankruptcies, Penalties or Sanctions
Other than set out below, none of the directors or executive officers is, as at the date of this AIF, or was within 10 years before the date of the AIF, a director or chief executive officer or chief financial officer of any company (including the Company) that:
a)
was subject to an order (as defined in National Instrument 51-102F2 of the Canadian Securities Administrators) that was issued while the director or executive officer was acting in the capacity as director, chief executive officer or chief financial officer; or
b)
was subject to an order that was issued after the director or executive officer ceased to be a director, chief executive officer, or chief financial officer, and which resulted from an event that occurred while that person was acting in the capacity as a director, chief executive officer, or chief financial officer.
Other than as set out below, none of the directors, executive officers or a shareholder holding a sufficient number of securities of the Company to affect materially the control of the Company,
a)
is, at the date of this AIF, or has been within 10 years before the date of this AIF, a director or executive officer of any company (including the Company) that, while that person was acting in that capacity, or within a year of that person ceasing to act in that capacity, became bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency or was subject to or instituted any proceedings, arrangement or compromise with creditors or had a receiver, receiver manager or trustee appointed to hold its assets; or
b)
has, within the 10 years before this AIF, become bankrupt, made a proposal under any legislation relating to bankruptcy or insolvency, or become subject to or instituted any proceedings, arrangement or compromise with creditors, or had a receiver, receiver manager or trustee appointed to hold the assets of the director, executive officer or shareholder.
On November 7, 2006, as a result of the Company failing to file its second quarter financial statements for fiscal 2007 before the statutory filing deadline of October 17, 2006, a management cease trade order (the “MCTO”) was issued by the Ontario Securities Commission (the “OSC”) that applied to certain of the Company’s senior officers and other insiders of the Company at that time, including Ms. Stymiest. The MCTO prohibited trading in the Company’s securities by its senior officers, directors and certain insiders during the time that the MCTO was in effect. The MCTO was revoked on May 23, 2007 after the required securities filings were made by the Company with the OSC.
On July 17, 2009, Luna Innovations Inc. (“Luna”) filed a voluntary petition for relief to reorganize under Chapter 11 of the United States Bankruptcy Code , including a proposed plan of reorganization with the United States Bankruptcy Court for the Western District of Virginia (the “Bankruptcy Court”). On January 12, 2010, the Bankruptcy Court approved the plan and Luna emerged from bankruptcy on that date. Mr. Daniels was a member of the board of Luna from June 2007 until his resignation on July 16, 2009.
On May 27, 2011, Phytomedics, Inc. (“Phytomedics”) filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of New Jersey.  Dr. Smaldone Alsup was Chief Executive Officer, President and a member of the board of directors of Phytomedics from April 2008 until the date of the bankruptcy filing when a trustee was appointed.
On November 21, 2013, TranSwitch Corporation (“TranSwitch”) filed a voluntary petition for relief under Chapter 7 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Connecticut.  Mr. Lynch was a member of the board of directors of TranSwitch from November 2010 and the chairman of the board from July 2012, until termination of the board on the date of the bankruptcy filing when a trustee was appointed.
On December 28, 2015, Kalobios Pharmaceuticals, Inc. (“Kalobios”) filed a voluntary petition for protection under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. Dr. Smaldone Alsup was a member of the board of directors of Kalobios from October 2013 until her resignation on November 19, 2015.
Conflicts of Interest
There is no existing or, to the Company’s knowledge, potential material conflict of interest between the Company or a subsidiary of the Company and any director or officer of the Company or a subsidiary of the Company. See also “Interest of Management and Others in Material Transactions” in this AIF.
AUDIT AND RISK MANAGEMENT COMMITTEE
The Audit and Risk Management Committee’s purpose is to provide assistance to the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting, internal control, and legal compliance and risk management functions of the Company and its subsidiaries. It is the objective of the Audit and Risk Management Committee to maintain free and open means of communications among the Board, the independent auditors and the financial and senior management of the Company. The full text of the Audit and Risk Management Committee’s Charter is included as Appendix A to this AIF.
Applicable securities laws require that, subject to certain exceptions, all members of the Audit and Risk Management Committee be “independent” under Sections 1.4 and 1.5 of National Instrument 52-110 of the Canadian Securities Administrators - Audit Committees and the rules and regulations of NASDAQ, and “financially literate”, meaning that the committee member has the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to those issues reasonably expected to be raised by the Company’s financial statements. Ms. Stymiest (Chair), Mr. Dattels, Dr. Smaldone Alsup and Mr. Wouters are the members of

38


the Audit and Risk Management Committee, and each is an independent director of the Company and financially literate, based on his or her education and experience as described below. The Audit and Risk Management Committee has also developed, in conjunction with the Company’s Chief Financial Officer and other accounting personnel and representatives of the Company’s external auditors, an orientation and continuing education program that will provide the new members of the Audit and Risk Management Committee with additional information and understanding about the accounting and financial presentation issues underlying the Company’s financial statements.
The members of the Audit and Risk Management Committee bring significant skill and experience to their responsibilities including professional experience in accounting, business, management and governance, and finance. The specific education and experience of each member that is relevant to the performance of his or her responsibilities as such member of the Audit and Risk Management Committee are set out below:
Barbara Stymiest, FCPA, FCA (Chair) – Ms. Stymiest has an HBA from the Richard Ivey School of Business, University of Western Ontario and an FCA from the Chartered Professional Accountants of Ontario. From 2004 to 2011, Ms. Stymiest held various senior management positions in the Royal Bank of Canada and served as a member of the Group Executive responsible for the overall strategic direction of the Company. Prior to this, Ms. Stymiest held positions as Chief Executive Officer at TMX Group Inc., Executive Vice-President & CFO at BMO Capital Markets and Partner of Ernst & Young LLP. Ms. Stymiest is currently a Director of George Weston Limited, Sun Life Financial Inc., University Health Network and the Canadian Institute for Advanced Research.
Timothy Dattels – Mr. Dattels has an MBA from Harvard Business School and is a Senior Partner of TPG Capital. Prior to joining TPG, Mr. Dattels served as a partner and Managing Director of Goldman Sachs and was head of Investment Banking for all Asian countries other than Japan. Through these roles, Mr. Dattels has gained extensive experience with financial analysis, financial advisory, analytics for mergers and acquisitions, public valuations, and financial valuation.
Dr. Laurie Smaldone Alsup – Dr. Smaldone Alsup has an MD from Yale University, where she completed her residency in Internal Medicine and fellowship in Medical Oncology. She is Chief Operating Officer and Chief Scientific Officer of NDA Group AB (which recently merged with PharmApprove where Dr. Smaldone Alsup was President and Chief Scientific Officer), a leading drug development consulting company. She previously served in clinical and regulatory roles of increasing responsibility and scope while at Bristol Myers Squibb, including Senior Vice President of Global Regulatory Science, where she also developed and led Business Risk Management for the company. In addition, she served as CEO of Phytomedics, an early stage biopharmaceutical company focused on arthritis and inflammation. Dr. Smaldone Alsup has extensive risk management and executive leadership experience.
The Hon. Wayne Wouters – Mr. Wouters has a BComm (Honours) from the University of Saskatchewan and an MA in economics from Queen’s University. From 2009 to 2014, Mr. Wouters was the Clerk of the Privy Council of Canada and held the roles of Deputy Minister to the Prime Minister, Secretary to the Cabinet and Head of the Public Service. Prior to his tenure as Clerk, Mr. Wouters was Secretary of the Treasury Board of Canada and served in deputy ministerial and other senior positions in the Canadian public service. He is currently Strategic and Policy Advisor to McCarthy Tétrault LLP and a director of Champion Iron Limited, and serves as a member of the Board of Trustees of United Way Worldwide. Mr. Wouters has extensive experience with economic policy and international trade matters, which included oversight of multi-billion dollar budgets on behalf of the Government of Canada.
The Board has also determined that Ms. Stymiest is an audit committee financial expert within the meaning of General Instruction B(8)(a) of Form 40-F under the U.S. Securities Exchange Act of 1934, as amended. The SEC has indicated that the designation of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose any duties, obligations or liability on such person that are greater than those imposed on members of the Audit Committee and the Board who do not carry this designation or affect the duties, obligations or liability of any other member of the audit committee or the Board.
As set out in the Audit and Risk Management Committee’s charter, the committee is responsible for pre-approving all non-audit services to be provided to the Company by its independent external auditor. The Company’s practice requires senior management to report to the Audit and Risk Management Committee any provision of services by the auditors and requires consideration as to whether the provision of the services other than audit services is compatible with maintaining the auditor’s independence. All audit and audit-related services are pre-approved by the Audit and Risk Management Committee.
Audit Fees
The aggregate fees billed by Ernst & Young LLP (“EY”) chartered accountants, the Company’s independent external auditor, for the fiscal years ended February 28, 2017 and February 29, 2016, respectively, for professional services rendered by EY for the audit of the Company’s annual financial statements or services that are normally provided by EY in connection with statutory and regulatory filings or engagements for such fiscal years were $2,891,007 and $2,567,933, respectively.

39


Audit-Related Fees
The aggregate fees billed by EY for the fiscal years ended February 28, 2017 and February 29, 2016, respectively, for assurance and related services rendered by EY that are reasonably related to the performance of the audit or review of the Company’s financial statements and are not reported above as “Audit Fees” were $18,071 and $13,042, respectively. The fees paid in this category relate to provision of assurance services related to certain contractual compliance clauses, as well as the Company’s corporate social responsibility disclosures.
Tax Fees
The aggregate fees billed by EY for the fiscal years ended February 28, 2017 and February 29, 2016, respectively, for professional services rendered by EY for tax compliance, tax advice, tax planning and other services were $69,363 and $36,180, respectively. Tax services provided included international tax compliance engagements.
All Other Fees
The aggregate fees billed by EY for the fiscal years ended February 28, 2017 and February 29, 2016, respectively, for professional services rendered by EY were $80,277 and $422,200, respectively.
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS
During the three-year period ending February 28, 2017 and during the current fiscal year up to the date hereof, none of the Company’s directors, executive officers, 10 percent shareholders or any of their associates or affiliates had a material interest, directly or indirectly, in any transaction that has materially affected or is reasonably expected to materially affect the Company, other than Mr. Watsa, the Chairman and Chief Executive Officer, and a significant shareholder, of Fairfax, which participated in the debenture financing in 2013 and continues to hold a significant proportion of the outstanding 3.75% Debentures. See “Description of Capital Structure - Convertible Debentures” in this AIF.
TRANSFER AGENTS AND REGISTRARS
The Company’s transfer agent and registrar in Canada is Computershare Investor Services Inc. of Canada at its offices in Toronto, Ontario. The co-transfer agent and registrar for the common shares in the United States is Computershare Trust Company, Inc. at its offices in Denver, Colorado.
MATERIAL CONTRACTS
Other than as noted below, the Company has not entered into any material contracts, on or after January 1, 2002, that are required to be filed pursuant to NI 51-102 of the Canadian Securities Administrators:
•
the Agreement and Plan of Merger among BlackBerry Corporation, Good, Greenbrier Merger Corp. and Shareholder Representative Services LLC dated September 4, 2015, providing for the acquisition of Good by the Company for a purchase price of $425 million. The Agreement and Plan of Merger is summarized in the Company’s material change report filed on SEDAR on September 14, 2015, which is incorporated by reference in this AIF;
•
the Subscription Agreement providing for the early redemption of the 6% Debentures, and the subscription for the 3.75% Debentures dated as of August 26, 2016, which has been filed on SEDAR and is summarized under “Description of Capital Structure - Convertible Debentures - Debenture Refinancing”; and
•
the Indenture providing for the issuance and conversion of the 3.75% Debentures, dated as of September 7, 2016, which has been filed on SEDAR, and the terms of which are summarized under “Description of Capital Structure - Convertible Debentures”.
INTERESTS OF EXPERTS
Ernst & Young LLP, Chartered Professional Accountants, Licensed Public Accountants, is the external auditor who prepared the Independent Auditors’ Report to Shareholders in respect of the audited annual consolidated financial statements of the Company for the year ended February 28, 2017 and the Report to Shareholders of an Independent Registered Public Accounting Firm on the Company’s internal controls over financial reporting. Ernst & Young LLP is independent with respect to the Company within the meaning of the Rules of Professional Conduct of the Chartered Professional Accountants of Ontario and applicable securities laws.
ADDITIONAL INFORMATION
Additional information related to the Company can be found on SEDAR at www.sedar.com or on the SEC’s website at www.sec.gov. Additional financial information is provided in the Company’s audited consolidated financial statements and the Company’s MD&A for the year ended February 28, 2017, which can be found at www.sedar.com.

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Additional information, including directors’ and officers’ remuneration and indebtedness to the Company, principal holders of the securities of the Company and securities authorized for issuance under equity compensation plans, is contained in the Company’s most recent management information circular.

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APPENDIX A
CHARTER OF THE AUDIT AND RISK MANAGEMENT COMMITTEE OF THE
BOARD OF DIRECTORS OF BLACKBERRY LIMITED AS ADOPTED BY
THE BOARD ON MARCH 30, 2017
 
1.
AUTHORITY
The Audit and Risk Management Committee (the “Committee”) of the Board of Directors (the “Board”) of BlackBerry Limited (the “Corporation”) is established pursuant to Section 5.03 of the Corporation’s Amended and Restated By-law No. A3 and Section 158 of the Ontario Business Corporations Act. The Committee shall be comprised of three or more directors as determined from time to time by resolution of the Board. Consistent with the appointment of other Board committees, the members of the Committee shall be appointed by the Board at the annual organizational meeting of the Board or at such other time as may be determined by the Board, and shall serve until the earlier of (i) the death of the member; or (ii) the resignation, disqualification or removal of the member from the Committee or from the Board. The Chair of the Committee shall be a member of the Committee designated by the Board, provided that if the Board does not so designate a Chair, the members of the Committee, by majority vote, may designate a Chair. The duties of the Chair are included in Annex A.
The presence in person or by telephone of a majority of the Committee’s members shall constitute a quorum for any meeting of the Committee. All actions of the Committee will require the vote of a majority of its members present at a meeting of the Committee at which a quorum is present. Any decision or determination of the Committee reduced to writing and signed by all members of the Committee who would have been entitled to vote on such decision or determination at a meeting of the Committee shall be fully as effective as if it had been made at a meeting duly called and held.
2.PURPOSE OF THE COMMITTEE
The Committee’s purpose is to provide assistance to the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting, internal control and legal compliance functions of the Corporation and its subsidiaries as well as with respect to the oversight of enterprise risk management, including risk compliance, the internal audit function, and the controls, processes and policies used by management to effectively manage the Corporation’s risks. It is the objective of the Committee to maintain free and open means of communication among the Board, the independent auditors and the financial and senior management of the Corporation.
3.COMPOSITION OF THE COMMITTEE
Each member of the Committee shall be an “independent” director within the meaning of Section 301 of the Sarbanes-Oxley Act of 2002 (“Sarbanes-Oxley”), the rules promulgated thereunder by the Securities and Exchange Commission (the “SEC”), the rules of the Nasdaq Stock Market (“Nasdaq”) and National Instrument 52-110 “Audit Committees” of the securities regulators in Canada, and, as such, shall be free from any relationship that may interfere with the exercise of his or her independent judgment as a member of the Committee.
All members of the Committee shall be financially literate at the time of their election to the Committee. “Financial literacy” shall be determined by the Board in the exercise of its business judgment, and shall include the ability to read and understand a set of financial statements that present a breadth and level of complexity of accounting issues that are generally comparable to the breadth and complexity of issues that can be reasonably expected to be raised by the Corporation’s financial statements. At least one member of the Committee shall be an “audit committee financial expert” with the meaning of Section 407 of Sarbanes-Oxley and the rules promulgated thereunder by the SEC. Members of the Committee may not serve, in the aggregate, on more than 3 audit committees of public companies, unless the Board has determined that such service will not impair the member’s ability to serve on the Committee.
Committee members, if they or the Board deem it appropriate, may enhance their understanding of finance and accounting by participating in educational programs conducted by the Corporation or an outside consultant or firm. At least annually, the Committee shall review its performance and the contribution of each of its members. This review will be completed on a confidential basis in conjunction with the annual Board performance review process.
4.MEETINGS OF THE COMMITTEE
The Committee shall meet with such frequency and at such intervals as it shall determine is necessary to carry out its duties and responsibilities. The Chair or any member of the Committee may call meetings of the Committee by notifying the Corporate Secretary of the Corporation. Notice of meetings may be done through any efficient communication medium (i.e. email, facsimile, mail, etc.) provided the notification is capable of being received at least twenty-four (24) hours in advance of the meeting. Each member of the Committee shall be responsible for providing up-to-date contact information to the Corporate Secretary to ensure efficient and timely communication. All independent directors may attend Committee meetings, provided that directors who are

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not members of the Committee shall not be entitled to vote, nor shall their attendance be counted as part of the quorum of the Committee.
As part of its purpose to foster open communications, the Committee shall meet at least annually with management and the Corporation’s independent auditors in separate executive sessions to discuss any matters that the Committee or each of these groups or persons believe should be discussed privately. The Committee will have unrestricted access to management and employees of the Corporation in order to carry out its duties and responsibilities. In addition, the Committee should meet or confer with the independent auditors and management to review the Corporation’s financial statements, MD&A, annual and interim earnings press releases and related filings prior to their public release and filing with the Ontario Securities Commission (“OSC”), the SEC or any other regulatory body. The Chair should work with the Chief Financial Officer and management to establish the agendas for Committee meetings. The Committee, in its discretion, may ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary.
Minutes of the Committee will be recorded and maintained by the Corporate Secretary and presented to the Committee at the next Committee meeting for approval. The Corporate Secretary, or his/her designate as approved by the Committee Chair, shall act as secretary for the meetings. For in camera sessions of the Committee without management present, minutes will be recorded and maintained by the Chair of the Committee or his/her designate. Each member of the Board will have access to the minutes of the Committee’s meetings, regardless of whether he or she is a member of the Committee, and the Chair shall report to the Board at its next meeting on the activities, findings and recommendations of the Committee following each meeting. Minutes relating to in camera sessions may be provided to Board members with the consent of the Chair.
5.DUTIES AND RESPONSIBILITIES OF THE COMMITTEE
The Committee is responsible for the oversight of the Corporation’s accounting, financial reporting and risk management processes, including (i) the Corporation’s internal controls, and the nomination and appointment (subject to Board and shareholder approval), compensation, retention, evaluation and oversight of the work of the Corporation's independent auditors engaged for the purpose of preparing or issuing an audit report or related work or performing other audit, review or attest services for the Corporation, (ii) the oversight of enterprise risk management activities and (iii) oversight of the Corporation's internal audit function as more particularly detailed below. The independent auditors and the leader of the internal audit function or his/her designee must report and otherwise communicate directly to the Committee and are accountable to the Committee. The Committee's oversight responsibilities include the authority to approve all audit engagement fees and terms, as well as all permitted non-audit engagements and resolution of disagreements between management and the independent auditors regarding financial reporting as well as oversight of the annual internal audit plan. The Committee shall take such actions as it may deem necessary to satisfy itself that the Corporation's auditors are independent of management within the meaning of applicable law.
While there is no “blueprint” to be followed by the Committee in carrying out its duties and responsibilities, the following should be considered within the authority of the Committee:
Selection and Evaluation of External Auditors
(1)
Make recommendations to the Board as to the selection of the firm of independent public accountants to audit the books and accounts of the Corporation and its subsidiaries for each fiscal year;
(2)
Review and approve the Corporation’s independent auditors’ annual engagement letter, including the proposed fees contained therein;
(3)
Review the performance of the Corporation’s independent auditors, including the lead partner, discuss the timing and process for implementing the rotation of the lead partner, and make recommendations to the Board regarding the replacement or termination of the independent auditors when circumstances warrant;
(4)
Oversee the independence of the Corporation’s independent auditors by, among other things:
(i)
requiring the independent auditors to deliver to the Committee on a periodic basis a formal written statement delineating all relationships between the independent auditors and the Corporation;
(ii)
reviewing and approving hiring policies concerning partners, employees and former partners and employees of the present and former independent auditors; and
(iii)
actively engaging in a dialogue with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors and taking appropriate action to satisfy itself of the auditors’ independence;
(5)
Instruct the Corporation’s independent auditors that:
(i)
they are ultimately accountable to the Committee;
(ii)
they must report directly to the Committee; and

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(iii)
the Committee is responsible for the appointment (subject to Board and shareholder approval), compensation, retention, evaluation and oversight of the Corporation’s independent auditors;
(6)
Review and pre-approve all audit and permitted non-audit services to be provided by the independent auditors to the Corporation, including tax services;
Oversight of Annual Audit and Quarterly Reviews
(1)
Review and accept, if appropriate, the annual audit plan of the Corporation’s independent auditors, including the scope of audit activities, and monitor such plan’s progress and results during the year;
(2)
Confirm through private discussions with the Corporation’s independent auditors and the Corporation’s management that no management restrictions are being placed on the scope of the independent auditors’ work;
(3)
Review the results of the year-end audit of the Corporation, including (as applicable):
(i)
the audit reports on the Corporation’s financial statements and management’s assessment of internal control over financial reporting, the published financial statements, the management representation letter, the “Memorandum Regarding Ac-counting Procedures and Internal Control” or similar memorandum prepared by the Corporation’s independent auditors, any other pertinent reports and management’s responses concerning such memorandum;
(ii)
the qualitative judgments of the independent auditors about the appropriateness, not just the acceptability, of accounting principles and financial disclosure practices used or proposed to be adopted by the Corporation and, particularly, about the degree of aggressiveness or conservatism of its accounting principles and underlying estimates;
(iii)
the selection and application of the Corporation’s critical accounting policies;
(iv)
the methods used to account for significant unusual transactions;
(v)
the effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus;
(vi)
management’s process for formulating sensitive accounting estimates and the reasonableness of these estimates;
(vii)
significant recorded and unrecorded audit adjustments;
(viii)
any material accounting issues among management, the internal audit function and the independent auditors; and
(ix)
other matters required to be communicated to the Committee under applicable auditing standards by the independent auditors;
(4)
Review the Corporation’s interim financial statements and quarterly earnings press releases and report thereon to the Board before such documents are approved by the Board and disclosed to the public;
(5)
Review with management and the Corporation’s independent auditors such accounting policies (and changes therein) of the Corporation, including any financial reporting issues which could have a material impact on the Corporation’s financial statements, as are deemed appropriate for review by the Committee prior to any year-end or quarterly filings with the SEC, the OSC or other regulatory body;
Oversight of Risk Management
(1)
Require the members of the Corporation’s senior leadership team to identify and provide the Committee with a portfolio view of the major areas of risk facing the Corporation and management’s strategies to manage those risks;
(2)
At least annually, review management’s risk appetite and evaluate the extent to which the Corporation’s risk profile and business planning are aligned with the risk appetite;
(3)
At least annually, review in light of the risk appetite, the Corporation’s enterprise risk management processes, including key policies and procedures for the effective identification, assessment, reporting, monitoring and control of the Corporation’s principal risks and the Corporation’s compliance with such policies and procedures;
(4)
Require, at least quarterly, management to update the Committee on any material or noteworthy changes relating to (1)-(3), immediately above, and the activities of the Corporation’s Risk Management Council;
(5)
Consult periodically with the Compensation, Nomination and Governance Committee on risk management matters within its purview;
(6)
Encourage an open and constructive risk dialogue between the Board and management on areas relating to risk management, and seek assurances from management on the effectiveness of risk management practices and controls;
(7)
Consider emerging industry and regulatory risk management issues and the possible impact on the Corporation;

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Oversight of the Internal Audit Function and Quarterly Reviews
(1)
Review the Committee’s level of involvement and interaction with the Corporation’s internal audit function, including the Committee’s line of authority over the internal audit function;
(2)
Review and advise on the appointment, replacement, reassignment, or dismissal of the leader of the internal audit function;
(3)
Review and approve the engagement of any firm of external advisors to support the internal audit function, including the fees thereof;
(4)
Review the resources, performance, effectiveness, degree of independence and objectivity of the internal audit function and the adequacy of its audit process, and approve changes to its charter;
(5)
Review internal audit reports, as well as management’s response to such reports, and review and approve the annual internal audit plan, including the proposed audit universe, priorities, resourcing, and, on a quarterly basis, the status of the audit plan and the then current assessment and management of risks subject to internal audit review;
(6)
Review the effectiveness of the internal audit function’s methodology relating to its assessment of risks subject to internal audit purview, including the factors considered and the relative weighting of such factors, and consider changes in management’s assessment of such risks;
(7)
Review with management the progress and results of all internal audit projects, approve procedures for implementing accepted recommendations, and, when deemed necessary or appropriate by the Committee, direct the Corporation’s Chief Executive Officer to assign additional audit projects to the leader of the internal audit function;
(8)
Meet privately with the leader of the internal audit function to discuss any areas of concern, and to confirm that (i) significant issues, including any material disagreements with the senior leadership team, are brought to the Committee’s attention and (ii) the integrity of the Company’s internal control and management information systems are satisfactory;
Oversight of Financial Reporting Process and Internal Controls
(1)
Review the adequacy and effectiveness of the Corporation’s accounting and internal control policies and procedures through inquiry and discussions with the Corporation’s independent auditors and management of the Corporation;
(2)
Review with management the Corporation’s administrative, operational and accounting internal controls and internal control over financial reporting, including the controls, security and functionality of the financial information technology systems, and evaluate whether the Corporation is operating in accordance with its prescribed policies, procedures and codes of conduct;
(3)
Review with management and the independent auditors any reportable conditions and material weaknesses affecting the Corporation’s internal control and financial reporting;
(4)
Receive periodic reports from the Corporation’s independent auditors and management of the Corporation to assess the impact on the Corporation of significant accounting or financial reporting developments proposed by the Chartered Professional Accountants Canada, the American Institute of Certified Public Accountants, the Financial Accounting Standards Board, the SEC, the OSC or other regulatory body, or any other significant accounting or financial reporting related matters that may have a bearing on the Corporation;
(5)
Establish and maintain free and open means of communication between and among the Board, the Committee, the Corporation’s independent auditors, the internal audit function and management;
Other Matters
(1)
In addition to meeting regularly with the general counsel, meet as needed with outside counsel to review legal and regulatory matters, including inquiries from governmental and regulatory authorities and any matters that may have a material impact on the financial statements of the Corporation;
(2)
Review the Corporation’s policies relating to the avoidance of conflicts of interest and review and approve related party transactions as required by the Corporation’s Code of Business Standards and Principles and applicable laws and listing rules, as well as policies and procedures with respect to officers’ expense accounts and perquisites. The Committee shall consider the results of any review of these policies and procedures by the Corporation’s independent auditors;
(3)
Oversee, review, and periodically update the Corporation’s Code of Business Standards and Principles and the Corporation’s system to monitor compliance with and enforcement of the Code of Business Standards and Principles;
(4)
Review and approve capital and operating expenditure limits on an annual basis and review and approval of any exceptions to such limits proposed by the Corporation from time to time;
(5)
Oversee areas under the responsibility of management, including the examination of securities trading by insiders;

45


(6)
Conduct or authorize investigations into any matters within the Committee's scope of responsibilities, including retaining outside counsel or other consultants or experts for this purpose;
(7)
Establish procedures for the receipt, retention and treatment of complaints received by the Corporation regarding accounting, internal controls or auditing matters and the confidential, anonymous submission by employees of the Corporation of concerns regarding questionable accounting or auditing matters; and
(8)
Perform such additional activities, and consider such other matters, within the scope of its responsibilities, as the Committee or the Board deems necessary or appropriate.
With respect to the exercise of its duties and responsibilities, the Committee should:
(1)
exercise reasonable diligence in gathering and considering all material information;
(2)
remain flexible, so that it may be in a position to best react or respond to changing circumstances or conditions;
(3)
understand and weigh alternative courses of conduct that may be available;
(4)
focus on weighing the benefit versus harm to the Corporation and its shareholders when considering alternative recommendations or courses of action;
(5)
if the Committee deems it appropriate, secure independent expert advice and understand the expert’s findings and the basis for such findings, including retaining independent counsel, accountants or others to assist the Committee in fulfilling its duties and responsibilities; and
(6)
provide management, the Corporation’s independent auditors and the leader of the internal audit function with appropriate opportunities to meet privately with the Committee.
Nothing in this Charter is intended, or should be determined, to impose on any member of the Committee a standard of care or diligence that is in any way more onerous or extensive than the standard to which all members of the Board are subject at law. The essence of the Committee’s responsibilities is to monitor and review the activities described in this Charter to gain reasonable assurance, but not to ensure, that such activities are being conducted properly and effectively by the Corporation.
6.FUNDING
The Committee’s effectiveness may be compromised if it is dependent on management’s discretion to compensate the independent auditors or the advisors employed by the Committee. Consequently, the Corporation shall provide for appropriate funding, as determined by the Committee, for payment of any compensation (1) to any independent auditors engaged for the purpose of rendering or issuing an audit report or related work or performing other audit, review or attest services for the Corporation, and (2) to any independent counsel or other advisors employed by the Committee or engaged to support the internal audit function.
7.DISCLOSURE AND REVIEW OF CHARTER
The Charter shall be (1) published in the Corporation’s annual report, information circular or annual information form, as required by law, and (2) be posted in an up-to-date format on the Corporation’s web site. The Committee should review and reassess annually the adequacy of this Charter.
* * *
While the Committee has the duties and responsibilities set forth in this Charter, the Committee is not responsible for planning or conducting the audit or for determining whether the Corporation’s consolidated financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Similarly, it is not the responsibility of the Committee to ensure that the Corporation complies with all laws and regulations.

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ANNEX A
(Duties and Responsibilities of the Chair)

In addition to the duties and responsibilities set out in the Board of Directors Mandate and this Charter, the Chair will:
1.
Provide overall leadership to enhance the effectiveness of the Committee, including:
a.
Recommend and oversee the appropriate structure, composition, membership, and activities delegated to the Committee;
b.
Chair all meetings of the Committee at which the Chair is in attendance and manage the meeting agenda so that appropriate time and consideration can be given to the agenda items;
c.
Lead discussions, foster candor among meeting participants and encourage Committee members to ask questions of senior management, its advisors and advisors of the Committee, and express viewpoints during meetings;
d.
Schedule and set the agenda for Committee meetings with input from other Committee members, the Committee’s advisors, the Executive Chair and the Lead Director of the Board of Directors, the CEO, the Corporate Secretary and senior management as appropriate and consider, on a proactive basis, emerging matters that should be addressed by the Committee;
e.
Facilitate the timely, accurate and proper flow of information to and from the Committee and, with input from Committee members, maintain an open dialogue with the Corporate Secretary regarding the timeliness, quantity, quality and completeness of information provided by senior management and advisors to the Committee;
f.
Arrange for management, internal personnel, external advisors, and others to attend and present at Committee meetings as appropriate;
g.
Arrange sufficient time during Committee meetings to fully discuss agenda items and, as appropriate, defer matters that require more information or time for discussion to a subsequent meeting;
h.
In cooperation with the Corporate Secretary and/or the Assistant Corporate Secretary, identify, monitor and report back to the Committee on the status of matters requiring action by senior management or the Committee following the meeting with a view to ensuring that matters are acted upon in a timely manner;
i.
Review draft minutes of Committee meetings prior to their presentation to the Committee for approval and ensure that minutes are reviewed and approved by the Committee in accordance with this Charter;
j.
Carry out the responsibilities and duties of the Committee, as outlined in this Charter, and
k.
Review this Charter and duties and responsibilities with Committee members at least annually.
2.
Foster responsible decision-making by the Committee and its individual members.
3.
Provide for in-camera sessions at all scheduled meetings of the Committee without management present and, as appropriate, without the Corporate Secretary present.
4.
Following each meeting of the Committee, report to the Board of Directors on the activities, findings and any recommendations of the Committee.
5.
Perform such other duties, within the scope of the Committee’s duties and responsibilities, as may be assigned by the Board of Directors.






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