Tilray Brands Inc

Notes to Consolidated Financial Statements

Note1. Basis of presentation and summary of significant accounting policies

The accompanying unaudited condensed interim consolidated financial statements (the “financial statements”) reflect the accounts of the Company for the quarterly period ended* November 30, 2023*. The financial statements were prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”) for interim financial information and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they donot include all of the information and notes required by U.S. GAAP and should be read in conjunction with the audited consolidated financial statements (the “Annual Financial Statements”) included in the Company’s Annual Report on Form10-K for the fiscal year ended* May 31, 2023* (the “Annual Report”). These unaudited condensed interim consolidated financial statements reflect all adjustments, which, in the opinion of management, are necessary for a fair presentation of the results for the interim periods presented. Interim results arenot necessarily indicative of results for a full year.

These condensed interim consolidated financial statements have been prepared on the going concern basis which assumes that the Company will continue in operation for the foreseeable future and, accordingly, will be able to realize its assets and discharge its liabilities in the normal course of operations as they come due, under the historical cost convention except for certain financial instruments that are measured at fair value, as detailed in the Company’s accounting policies.

All amounts in the unaudited condensed interim consolidated financial statements, notes and tables have been rounded to the nearest thousand, except par values and per share amounts, unless otherwise indicated.

Certain items of the comparative figures have been changed to conform to the presentation adopted in the current period.

Basis of consolidation

Subsidiaries are entities controlled by the Company. Control exists when the Company either has a controlling voting interest or is the primary beneficiary of a variable interest entity. The financial statements of subsidiaries are included in the condensed interim consolidated financial statements from the date that control commences until the date that control ceases. A complete list of our subsidiaries that existed prior to our most recent year end is included in the Annual Report, except for the entities acquired within Note7 (Business acquisitions), during the period ended* November 30, 2023*.

Marketable securities

We classify term deposits and other investments that have maturities of greater thanthree months but less thanone year as marketable securities. The fair value of marketable securities is based on quoted market prices for publicly traded securities. Marketable securities are carried at fair value with changes in fair value recorded in the statement of net loss and comprehensive loss, within the line, “Non-operating income (expense)”.

Restricted cash

We classify cash that is legally or contractually restricted as to withdrawal or usage, as restricted cash. As of* November 30, 2023*, the Company reported $1,576 restricted cash related to letters of credit and collateral from the acquisition of HEXO Corp. as described in Note7 (Business acquisitions).

Assets held for sale

We classify capital assets that are available and which are probable for immediate sale in their present condition, which the Company has approved the action or plan to sell, as assets held for sale. As of* November 30, 2023*, the Company reported $736 assets held for sale related to Kirkland lake property from the acquisition of HEXO Corp. as described in Note7 (Business acquisitions). Assets held for sale are to be measured at the lower of carrying amount and the fair value less costs to sell. Disposition of assets held for sale are recorded in the statement of net loss and comprehensive loss, within the line, “Non-operating income (expense)”.

When there are changes in circumstances that were previously considered unlikely to occur, and it is decidednot to proceed with a sale, an asset that was previously classified as assets held for sale is reclassified as held and used. The asset is then remeasured at the lower of its carrying amount before being classified as held for sale less the amortization that would have occurred and the fair value on the date the decisionnot to proceed with a sale was made. Changes in the carrying amount are recorded in the statement of net loss and comprehensive loss.

Long-term investments

Investments in equity securities of entities over which the Company doesnot have a controlling financial interest or significant influence are classified as an equity investment and accounted for at fair value. Equity investments without readily determinable fair values are measured at cost with adjustments for observable changes in price or impairments (referred to as the “measurement alternative”). In applying the measurement alternative, the Company performs a qualitative assessment on a quarterly basis and recognizes an impairment if there are sufficient indicators that the fair value of the equity investments is less than carrying values. Changes in value are recorded in the statement of net loss and comprehensive loss, within the line, “Non-operating income (expense)”.

5

Investments in entities over which the Company doesnot have a controlling financial interest but has significant influence, are accounted for using the equity method, with the Company’s share of earnings or losses reported in earnings or losses from equity method investments on the statements of net loss and comprehensive loss. Equity method investments are recorded at cost, adjusted for the Company’s share of undistributed earnings or losses, and impairment, if any, within “Interest in equity investees” on the balance sheets. The Company assesses investments in equity method investments when events or circumstances indicate that the carrying amount of the investment* maybe impaired. If it is determined that the current fair value of an equity method investment is less than the carrying value of the investment, the Company will assess if the shortfall is other than temporary (OTTI). Evidence of a loss in value might include, but wouldnot* necessarily be limited to, absence of an ability to recover the carrying amount of the investment or inability of the equity investee to sustain an earnings capacity that would justify the carrying amount of the investment. Once a determination is made that an OTTI exists, the investment is written down to its fair value in accordance with ASC820 at the reporting date, which establishes a new cost basis.

Convertible notes receivable

Convertible notes receivable include various investments in which the Company has the right, or potential right to convert the indenture into common stock of the investee and are classified as available-for-sale and are recorded at fair value. Unrealized gains and losses during the year, net of the related tax effect, are excluded from income and reflected in other comprehensive income (loss), and the cumulative effect is reported as a separate component of shareholders' equity until realized. We use judgement to assess convertible notes receivables for impairment at each measurement date. Convertible notes receivables are impaired when a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in the statements of loss and comprehensive loss and a new cost basis for the investment is established. We also evaluate whether there is a plan to sell the security, or it is more likely thannot that we will be required to sell the security before recovery. If neither of the conditions exist, then only the portion of the impairment loss attributable to credit loss is recorded in the statements of net loss and the remaining amount is recorded in other comprehensive income (loss).

Revenue

Revenue is recognized when the control of the promised goods or services, through performance obligation, is transferred/provided to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for the performance obligations.

Excise taxes remitted to tax authorities are government-imposed excise taxes on cannabis and beer. Excise taxes are recorded as a reduction of sales in net revenue in the consolidated statements of operations and recognized as a current liability within accounts payable and accrued liabilities on the consolidated balance sheets, with the liability subsequently reduced when the taxes are remitted to the tax authority.

In addition, amounts disclosed as net revenue are net of excise taxes, sales tax, duty tax, allowances, discounts and rebates.

6

In determining the transaction price for the sale of goods or services, the Company considers the effects of variable consideration and the existence of significant financing components, if any.

We* mayenter into certain contracts for the sale of goods or services, which provide customers with rights of return, volume discounts, bonuses for volume/quality achievement, and/or sales allowances. In addition, the Company mayprovide in certain circumstances, a retrospective price reduction to a customer based primarily on inventory movement. The inclusion of these items may*give rise to variable consideration. The Company uses the expected value method to estimate the variable consideration because this method provides the most accurate estimation of the amount of variable consideration to which the Company will be entitled. The Company uses historical evidence, current information and forecasts to estimate the variable consideration. The Company reduces revenue and recognizes a contract liability equal to the amount expected to be refunded to the customer in the form of a future rebate or credit for a retrospective price reduction, representing its obligation to return the customer’s consideration. The estimate is updated at each reporting period date.

On* July 12, 2022,the Company and HEXO Corp. ("HEXO") entered into various commercial transaction agreements, as described in Note26* (Segment reporting), which included an advisory services arrangement. The fees associated with the advisory services arrangement were recognized as revenue when such services were provided to HEXO. Any payments that were received for such services in advance of performance were recognized as a contract liability. On* June 22, 2023,the Company completed the acquisition of HEXO, as described in Note7* (Business acquisitions), simultaneously terminating the advisory services arrangement and other commercial transactions.

Transaction (income) costs

The Company expenses costs net of any gains directly attributable to business acquisitions and classifies these items as transaction (income) costs. These items include among other things, legal fees to complete the acquisition, financial advisor and due diligence costs, and transaction related compensation. These items are recognized as incurred.

Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing reported net income (loss) attributable to stockholders of Tilray Brands, Inc. by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is computed by dividing reported net income (loss) attributable to stockholders of Tilray Brands, Inc. by the sum of the weighted average number of common shares and the number of dilutive potential common share equivalents outstanding during the period. Potential dilutive common share equivalents consist of the incremental common shares issuable upon the exercise of vested share options, warrants, and RSUs and the incremental shares issuable upon conversion of the convertible debentures and similar instruments. Shares of common stock outstanding under the share lending arrangement entered into in conjunction with the TLRY27 Notes, see Note13 (Convertible debentures payable) are excluded from the calculation of basic and diluted earnings per share because the borrower of the shares is required under the share lending arrangement to refund any dividends paid on the shares lent.

In computing diluted earnings (loss) per share, common share equivalents arenot considered in periods in which a net loss is reported, as the inclusion of the common share equivalents would be anti-dilutive. For thethree months ended* November 30, 2023* and* November 30, 2022,*the dilutive potential common share equivalents outstanding consisted of the following:20,939,082 and 16,884,493 common shares from RSUs,6,280,065 and 4,674,512 common shares from share options,6,209,000 and 6,209,000 common shares for warrants and 77,181,260 and 23,981,704 common shares for convertible debentures, respectively.

New accounting pronouncementsnot* yet adopted*

In* August 2023,the FASB issued ASU2023*-05, Business Combination - Joint Venture Formations(Subtopic805-60) Recognition and Initial Measurement (“ASU2023-05”), which is intended to address the accounting for contributions made to a joint venture. ASU2023-05 is effective for the Company beginning* June 1, 2026.*This update will be applied prospectively on or after the effective date of the amendments. The Company is currently evaluating the effect of adopting this ASU.

In* October**2023,* the FASB issued ASU2023-06, Disclosure Improvements: Codification Amendments in Response to the SEC’s Disclosure Update and Simplification Initiative,which amends the disclosure or presentation requirements related to various subtopics in the FASB Accounting Standards Codification (the “Codification”). The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. If by June 30, 2027,the SEC hasnot removed the applicable requirement from Regulation S-X or Regulation S-K, the pending content of the related amendment will be removed from the Codification and willnot become effective for any entity. The Company is currently evaluating the effect of adopting this ASU.

In* November**2023,* the FASB issued ASU2023-07, Segment Reporting (Topic280*) Improvements to Reportable Segment Disclosures,which requires public entities to disclose information about their reportable segments’ significant expenses on an interim and annual basis. ASU2023*-07 is effective for the Company beginning the year ended* May 31, 2025.*The Company is currently evaluating the effect of adopting this ASU.

In* December 2023,the FASB issued ASU2023*-09, Income Taxes (Topic740*) Improvements to Income Tax Disclosures,which requires public entities to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold on an annual basis. ASU2023*-09 is effective for the Company beginning the year ended* June 01, 2024.*The Company is currently evaluating the effect of adopting this ASU.

New accounting pronouncements recently adopted

In* October 2021,the FASB issued ASU2021*-08, Business Combinations (Subtopic805*), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers* (“ASU2021-08”), which is intended to improve the accounting for acquired revenue contracts with customers in a business combination by addressing diversity in practice and inconsistency. The Company adopted the ASU2021-08 beginning* June 1, 2023,however, it didnot* have any impact on our condensed interim consolidated financial statements.

7

Note2. Inventory

Inventory consisted of the following:

Note3. Capital assets

Capital assets consisted of the following:

8

Note4. Leases

The table below presents the lease-related assets and liabilities recorded on the balance sheet.

The following table presents the future undiscounted payment associated with lease liabilities as of* November 30, 2023*:

Note5. Intangible Assets

Intangible assets consisted of the following items:

Included in licenses, permits & applications was $184,858 of indefinite-lived intangible assets as of* November 30, 2023*, compared to $181,093 as of* May 31, 2023*.

Expected future amortization expense for intangible assets as of* November 30, 2023* are as follows:

9

Note6. Goodwill

The following table shows the carrying amount of goodwill by reporting units:

10

Note7. Business a****cquisitions

Acquisition of**Montauk Brewing Company, Inc.

On* November 7, 2022,Tilray acquired Montauk Brewing Company, Inc. (“Montauk”), a leading craft brewer based in Montauk, New York, which expanded our distribution network with a strong brand in the tri-state region of the U.S. In consideration for the acquisition of Montauk, and after giving effect to post-closing adjustments, the Company paid an aggregate purchase price equal to $35,123, which was comprised of $28,701 in cash and the remainder through the issuance of 1,708,521 shares of Tilray's common stock (having a value of $6,422 at closing). In the event that Montauk achieves certain volume and/or EBITDA targets on or before December 31, 2025,the stockholders of Montauk shall be eligible to receive additional contingent cash consideration of up to $18,000. The Company determined that the closing date fair value of this contingent consideration was $10,245 based on the inputs disclosed in Note25* (Fair value measurements).

The table below summarizes fair value of the assets acquired and the liabilities assumed at the effective acquisition date.

In the event that the Montauk acquisition had occurred on* June 1, 2022,the Company would have had additional net revenue of approximately $3,100 and $9,000 for thethree* andsix months ended* November 30, 2022and net loss and comprehensive net loss would have increased by approximately $600 and $500 for thethree* andsix months ended* November 30, 2022,primarily as a result of amortization of the intangible assets acquired. This unaudited pro forma financial information doesnot* reflect the realization of any expected ongoing synergies relating to the integration of Montauk.

11

Acquisition of HEXO Corp.

On* June 22, 2023,*Tilray acquired HEXO, a cannabis company in Canada (the “HEXO Acquisition”) for the purpose of expanding the Company’s revenue base, production capabilities around certain form factors and growth opportunities with the Redecan brand. In consideration for the HEXO Acquisition, the Company paid a total purchase price equivalent of $93,882, which consisted of stock consideration of $63,927, settlement of convertible notes receivable of $28,720, the fair value of HEXO stock-based compensation of $1,188 and the assumption of warrants of $47. In connection with the HEXO Acquisition, each outstanding HEXO common share was exchanged for 0.4352 of a share of Tilray common stock and each outstanding HEXO preferred share was exchanged for 0.7805 of a share of Tilray common stock. In the aggregate, the Company issued 39,705,962 shares of Tilray common stock, at a share price of $1.61 per share, in connection with the HEXO Acquisition. The Company intends to sell HEXO's Kirkland lake property and has recorded the value of the associated capital assets as an asset held for sale.

The Company is in the process of assessing the fair value of the net assets acquired and, as a result, the fair value* may*be subject to adjustments pending completion of final valuations and post-closing adjustments. The table below summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed for the HEXO Acquisition at the effective acquisition date as follows:

Included in accounts payable and accrued liabilities was $12,253 of litigation settlement accruals as of* June 22, 2023.*

In the event the HEXO Acquisition had occurred on* June 1, 2022,the Company would have had, on an unaudited proforma basis, additional net revenue of approximately$nil and $7,000 for thethree* andsix months period ended* November 30, 2023and $20,000 and $40,000 for thethree* andsix months period ended* November 30,2022, respectively, and its net loss and comprehensive net loss would have increased by approximately$nil and $1,800 for thethree andsix months period ended November 30,2023, and $30,000 and $60,000 for thethree andsix months period ended November 30,*2022, respectively. This unaudited pro forma financial information doesnot reflect the realization of any expected ongoing synergies relating to the integration of HEXO.

Acquisition of Truss Beverage Co.

On* August 3, 2023,Tilray acquired the remaining 57.5% equity interest in Truss Beverage Co. ("Truss"), a cannabis beverage company, from Molson Coors Canada ("Molson"). This purchase represents the equity portion of Truss that hadnot* been previously acquired as part of the HEXO Acquisition. The consideration paid by Tilray consisted of $74 (CAD$100) in cash and contingent consideration fair valued at $4,181. Tilray initially planned to divest Truss' assets and recorded the value of the associated capital assets and lease obligations as an asset held for sale. Tilray has agreed to pay Molson as contingent consideration an amount equal to57.5% of any proceeds from any divesture, net of any costs and expenses associated with the disposition. During the period ended* November 30, 2023,due to a change in circumstance in the Company's ability to sell these assets, they were subsequently reclassified as capital assets as the Company has made alternative plans for their utilization. The asset was then remeasured at the lower of its carrying amount before being classified as held for sale less the amortization that would have occurred and the fair value on the date the decisionnot* to proceed with a sale was made. Changes in the carrying amount were recorded in the statement of net loss and comprehensive loss as amortization in cost of goods sold.

The Company is in the process of assessing the fair value of the net assets acquired and, as a result, the fair value of the net assets acquired* may*be subject to adjustments pending completion of final valuations and post-closing adjustments. The table below summarizes preliminary estimated fair value of the assets acquired and the liabilities assumed at the effective acquisition date as follows:

In the event that the Truss acquisition had occurred on* June 1, 2022the Company would have had, on an unaudited proforma basis, additional net revenue of approximately$nil and $3,000 for thethree* andsix months period ended* November 30, 2023and $3,300 and $6,300 for thethree* andsix months period ended* November 30,2022, respectively, and its net loss and comprehensive net loss would have increased by approximately$nil and $700 for thethree andsix months period ended November 30,2023, and $500 and $1,200 for thethree andsix months period ended November 30,*2022, respectively. This unaudited pro forma financial information doesnot reflect the realization of any expected ongoing synergies relating to the integration of Truss.

Acquisition of Craft**Beverage Business Portfolio

On* September 29, 2023,Tilray acquired a portfolio of craft brands, assets and businesses comprising eight beer and beverage brands from Anheuser-Busch Companies, LLC, ("AB") including breweries and brewpubs associated with them (the “Craft Acquisition”). The acquired businesses/brands include Shock Top, Breckenridge Brewery, Blue Point Brewing Company,10 Barrel Brewing Company, Redhook Brewery, Widmer Brothers Brewing, Square Mile Cider Company, and HiBall Energy. The Company paid a total purchase price equivalent of $83,658 in cash, net of a preliminary working capital adjustment at closing of $1,342, which is subject to a final working capital adjustment. As described in Note12* (Long-term debt),$20,000 was borrowed under the420 Delayed Draw Term Loan Agreement to fund part of the purchase price paid for the Craft Acquisition.

The Company is in the process of assessing the fair value of the net assets acquired and, as a result, the fair value* may*be subject to adjustments pending completion of final valuations and post-closing adjustments. The table below summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed for the Craft Acquisition at the effective acquisition date as follows:

In the event that the Craft Acquisition had occurred on* June 1, 2022,the Company would have had, on an unaudited proforma basis, additional revenue of approximately $14,000 and $55,000 for thethree* andsix months period ended* November 30, 2023and $42,000 and $85,000 for thethree* andsix months period ended* November 30,2022, respectively, and its net loss and comprehensive net loss would have increased by approximately $2,000 and $5,000 for thethree andsix months period ended November 30,2023, and $1,400 and $900 for thethree andsix months period ended November 30,*2022, respectively. This unaudited pro forma financial information doesnot reflect the realization of any expected ongoing synergies relating to the integration of the Craft Acquisition.

Note8. Convertible notes receivable

Convertible notes receivable is comprised of the following:

HEXO Convertible Note

On* June**22,* 2023, the Company completed the HEXO Acquisition as described in Note7 (Business acquisitions). Concurrently with the closing of the HEXO Acquisition, the HEXO convertible note was converted into shares of HEXO.

12

MedMen Convertible Note

On* August 31, 2021,the Company issued 9,817,061 shares valued at $117,804 to acquire 68% interest in Superhero Acquisition L.P. (“SH Acquisition”), which purchased a senior secured convertible note issued by MedMen (the "MedMen Convertible Note"), together with certain associated warrants to acquire Class B subordinate voting shares of MedMen, in the principal amount of $165,799. The MedMen Convertible Note bears interest at the Secured Overnight Financing Rate ("SOFR") plus 6%, with a SOFR floor of 2.5% with any accrued interest being added to the outstanding principal amount. The outstanding principal amount, together with accrued interest is to be paid on August 17, 2028,*the maturity date of the MedMen Convertible Note. SH Acquisition was also granted “top-up” rights enabling it (and its limited partners) to maintain its percentage ownership (on an “as-converted” basis) in the event that MedMen issues equity securities. SH Acquisition’s ability to convert the MedMen Convertible Note and exercise the Warrants is dependent upon U.S. federal legalization of cannabis or Tilray’s waiver of such requirement as well as any additional regulatory approvals.

The MedMen Convertible Note was based upon the fair value of the collateral assets net of disposal costs. In the prior year, the Company used the Black-Scholes model using the following assumptions: the risk-free rate of 3.50%; expected life of the convertible note; volatility of 70% based on comparable companies; forfeiture rate ofnil; dividend yield ofnil; probability of legalization between 0% and 60%; and, the exercise price of the respective conversion feature.

The Company didnot derive any revenue or cash from MedMen's operations, and fully complies with all limitations imposed by applicable U.S. law and regulations in connection with its ownership of the MedMen Convertible Note. In addition, the Company didnot recognize any interest income on the MedMen Convertible Note for thethree andsix months ended* November 30, 2023*, which would have increased its value.

Note9. Long term investments

Long term investments consisted of the following:

13

Note10. Bank indebtedness

Aphria Inc., a subsidiary of the Company, has an operating line of credit in the amount of C$1,000, which bears interest at the lender’s prime rate plus 75 basis points. As of* November 30, 2023*, the Company hasnot drawn on the line of credit. The operating line of credit is secured by a security interest on that certain real property located at265 Talbot St. West, Leamington, Ontario.

CC Pharma GmbH, a subsidiary of the Company, hastwo operating lines of credit for€7,000 and€500 each, which bear interest at Euro Short-Term Rate ("ESTR") plus 2.50% and Euro Interbank Offered Rate ("EURIBOR") plus 4.00%, respectively. As of* November 30, 2023*, a total of€7,438 ($8,181) was drawn down from the available credit of€7,500. The operating line of credit for€7,000 are secured by an interest in the inventory of CC Pharma GmbH as well as the Densborn facility and underlying real property. The operating line of credit for€500 is unsecured.

Four Twenty Corporation (“420”), a subsidiary of the Company, has a revolving credit facility of $30,000, which bears interest at SOFR plus an applicable margin. As of* November 30, 2023*, the Company has drawn $12,000 on the revolving line of credit. The revolving credit facility is secured by all of Montauk, the Craft Acquisition's assets and420's assets and includes a corporate guarantee by a subsidiary of the Company.

Note11. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are comprised of:

14

Note12. Long-term debt

The following table sets forth the net carrying amount of long-term debt instruments:

During the quarter ended* August 31, 2023,Four Twenty Corporation ("420"), a wholly-owned subsidiary of the Company, repaid its $100,000 term loan and entered into a new secured credit agreement, which comprised of: (i) a $70,000 term loan facility, bearing interest at SOFR plus an applicable margin and having a maturity date of June 30, 2028 (the"420* Term Loan"), and (ii) a $20,000 delayed draw term loan facility, issued on the same terms as the $70,000 term loan facility (the*"420* Delayed Draw Term Loan" and, together with the420 Term Loan the*"420* Secured Credit Agreement"). The420 Term Loan was fully drawn on* June 30, 2023.The420* Delayed Draw Term Loan was fully drawn on* September 29,*2023 to fund part of the purchase price for the Craft Acquisition as described in Note7 (Businessa cquisitions). Under the terms of the420 Secured Credit Agreement, the Company pledged all of Sweetwater, Breckenridge, Montauk and the Craft Acquisition's assets and the related equity interests, and Tilray Brands, Inc. provided a limited guarantee, as well as requiring the lenders approval to transfer assets to Tilray Brands, Inc.

As of* November 30, 2023*,420 wasnot in compliance with the leverage ratio covenant under the420 Secured Credit Agreement, but obtained a waiver from the lender on* January 5, 2024.*

15

Note13. Convertible debentures payable

The following table sets forth the net carrying amount of the convertible debentures payable:

TLRY27* Notes*

The TLRY27 convertible debentures were issued on* May 30, 2023and on June 9, 2023by way of overallotment, in the principal amount of $172,500 (the “TLRY27* Notes”). The TLRY27 Notes bear interest at a rate of 5.20% per annum, payable semi-annually in arrears on* June 15and December 15of each year, and mature on June 15, 2027,unless earlier converted. The TLRY27* Notes are Tilray’s general unsecured obligations and rank senior in right of payment to all of Tilray’s indebtedness that is expressly subordinated in right of payment to the notes; equal in right of payment with any of Tilray’s unsecured indebtedness that isnot so subordinated, including TLRY23 and APHA24, effectively junior in right of payment to any of Tilray’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables but excluding intercompany obligations) of Tilray’s current or future subsidiaries. Noteholders will have the right to convert their TLRY27 Notes into shares of Tilray’s common stock at their option, at any time, until the close of business on thesecond scheduled trading day immediately before* June 15, 2027.The initial conversion rate is 376.6478 shares per $1,000 principal amount of TLRY27* Notes, which represents a conversion price of approximately $2.66 per share. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events.

The TLRY27 Notes will be redeemable, in whole andnot in part, at Tilray’s option at any time on or after* June 20, 2025at a cash redemption price equal to the principal amount of the notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date, but only if the last reported sale price of Tilray’s common stock exceeds 130% of the conversion price for a specified period of time. If certain corporate events that constitute a fundamental change occur, then, subject to a limited exception, noteholders mayrequire Tilray to repurchase their TLRY27* Notes for cash. The repurchase price will be equal to the principal amount of the notes to be repurchased, plus accrued and unpaid interest, if any, to, but excluding, the applicable repurchase date. In connection with the Company’s offering of the TLRY27 Notes, the Company entered into a share lending agreement with an affiliate of Jefferies LLC (the “Share Borrower”), pursuant to which it lent to the Share Borrower 38,500,000 shares of the Company’s common stock (the "Borrowed Shares"). The Borrowed Shares were newly-issued shares, will be held as treasury shares until the expiration or early termination of the share lending agreement and* maybe used by purchasers of the TLRY27* Notes to sell up to 38,500,000 shares of the Company’s common stock. The fair value of the share lending agreement has been recorded as part of the unamortized discount on the debenture. The Company expects that the selling stockholders will use their position created by such sales to establish their initial hedge with respect to their investments in the TLRY27 Notes. The Company didnot receive any proceeds from the sale of the Borrowed Shares.

During thethree andsix months ended* November 30, 2023*, the Company recognized interest expense of $2,423 and $4,485 and accretion of amortized discount interest of $2,829 and $5,624. For the same periods in the prior year there wasno interest or accretion of amortized discount.

HTI Convertible Note

On* July 12, 2022,the Company issued a $50,000 convertible promissory note to HTI ("HTI Convertible Note"), bearing a 4% interest rate payable on a quarterly basis and having a maturity date of September 1, 2023.On August 31, 2023,the Company settled in full the HTI Convertible Note through the issuance of shares as described in Note15* (Stockholders' equity).

APHA24* Notes*

The APHA24 convertible debentures, were entered into in* April 2019,in the principal amount of $350,000, bear interest at a rate of 5.25% per annum, payable semi-annually in arrears on June 1and December 1of each year, and mature on June 1, 2024,unless earlier converted (the APHA24* Notes"). The APHA24 Notes are Tilray’s general unsecured obligations and rank senior in right of payment to all of Tilray’s indebtedness that is expressly subordinated in right of payment to the notes; equal in right of payment with any of Tilray’s unsecured indebtedness that isnot so subordinated, including TLRY23 and TLRY27, effectively junior in right of payment to any of Tilray’s secured indebtedness to the extent of the value of the assets securing such indebtedness; and structurally junior to all indebtedness and other liabilities (including trade payables but excluding intercompany obligations) of Tilray’s current or future subsidiaries.

Holders of the APHA24 Notes* mayconvert all or any portion of such note, in multiples of$1* principal amount, at their option at any time between* December 1, 2023to the maturity date of June 1, 2024.The initial conversion which the Company may*settle in cash, or common shares of Tilray, or a combination thereof, at Tilray's election, is equivalent to an initial conversion price of approximately $11.20 per common share, subject to adjustments in certain events.

16

The Company* mayredeem for cash all or part of the APHA24,* at its option, if the last reported sale price of the Company’s common shares has been at least 130% of the conversion price then in effect for at least 20 trading days during any 30 consecutive trading day period ending on and including trading day immediately preceding the date on which the Company provides notice of redemption. The redemption of the APHA24 will be equal to 100% of the principal amount plus accrued and unpaid interest to, but excluding, the redemption date.

The Company elected the fair value option under ASC825 Fair Value Measurements for the APHA24. The APHA24 was initially recognized at fair value on the balance sheet. All subsequent changes in fair value, excluding the impact of the change in fair value related to instrument-specific credit risk are recorded in non-operating income. The changes in fair value related to instrument-specific credit risk is recorded through other comprehensive income (loss).

The Company plans to purchase or exchange some or all of its APHA24 Notes, in open market purchases, privately negotiated transactions or otherwise prior to their maturity in* June 2024.Such purchases or exchanges, if any, will depend on prevailing market conditions, contractual restrictions and other factors. See Note27* (Subsequent Events) for additional details.

The overall change in fair value of APHA24 during thesix months ended* November 30, 2023* decreased by $7,831 (* November 30, 2022 –*$6,542 of fair value changes), this was comprised of $6,041 of fair value changes and a foreign exchange loss of $1,790.

There was $136,740 principal outstanding as at* November 30, 2023* and* May 31, 2023.*

During thethree andsix months ended* November 30, 2023*,the Company recognized total interest expense of $1,795 and $3,589, respectively and total interest expense of $3,393 and $6,786, respectively for the same period in the prior year.

TLRY23* Notes*

The TLRY23 Notes bore interest at a rate of 5.00% per annum, payable semi-annually in arrears on* April 1and October 1of each year. On September 12, 2023,the Company repurchased $20,000 of its TLRY23* Notes for cancellation by issuing 7,000,000 shares and paying $610 of cash to settle both principal and accrued interest. Upon repurchase of the TLRY23 Notes, a portion of the settlement consideration was allocated to the equity component of the instrument and was recognized as a $1,672 reduction of additional paid-in capital in the Consolidated Statements of Changes in Equity. Additionally, this repurchase resulted in a loss of $1,062 which was recorded in other non-operating (losses) gains, net as shown in Note24 (Non-operating income (expense)).

After cancellation, the outstanding principal balance of the TLRY23 Notes was $107,330. On* October 2, 2023,the Company repaid the remaining principal of the TLRY23* Notes in cash upon maturity.

During thethree andsix months ended* November 30, 2023*, the Company recognized total interest expense of $1,592 and $2,122, respectively and total interest expense of $2,373 and $3,746, respectively for the same period in the prior year.

17

Note14. Warrant liability

As of* November 30, 2023* and* May 31, 2023,there were 6,209,000 warrants outstanding, with an original exercise price of $5.95 per warrant, expiring March 17, 2025.*Each warrant is exercisable forone common share of the Company.

The warrants contain anti-dilution price protection features, which adjust the exercise price of the warrants if the Company subsequently issues common stock at a price lower than the exercise price of the warrants. In the event additional warrants or convertible debt are issued with a lower and/or variable exercise price, the exercise price of the warrants will be adjusted accordingly. During thesix months ended* November 30, 2023*, the Company issued shares which triggered the anti-dilution price protection feature lowering the exercise price to $1.61. These warrants are classified as liabilities as they are to be settled in registered shares, and the registration statement is required to be active, unless such shares* maybe subject to an applicable exemption from registration requirements. The holders, at their sole discretion, mayelect to affect a cashless exercise, and be issued exempt securities in accordance with Section3*(a)(9) of the1933 Act. In the event the Company doesnot maintain an effective registration statement, the Company* maybe required to pay a daily cash penalty equal to 1% of the number of shares of common stock due to be issued multiplied by any trading price of the common stock between the exercise date and the share delivery date, as selected by the holder. Alternatively, the Company maydeliver registered common stock purchased by the Company in the open market. The Company mayalso be required to pay cash if it doesnot* have sufficient authorized shares to deliver to the holders upon exercise.

The Company estimated the fair value of warrants outstanding at* November 30, 2023* at $0.607 per warrant using the Black Scholes pricing model (Level3) with the following assumptions: Risk-free interest rate of 4.4%, expected volatility of 50%, expected term of 1.30 years, strike price of $1.61 and fair value of common stock of $1.81.

Expected volatility is based on both historical and implied volatility of the Company’s common stock.

Note15. Stockholders' equity

Issued and outstanding

As of* November 30, 2023*, the Company had 1,198,000,000 common shares and 10,000,000 preferred shares authorized to be issued, with 732,907,552 common shares andnil preferred shares issued and outstanding. Historically, the Company has issued shares of its common stock as consideration for business acquisitions, including the settlement of convertible notes, the settlement of litigation claims, in connection with public offerings and as payment of dividends to non-controlling interests for profit distributions.

During thesix months ended* November 30, 2023*, the Company issued the following common shares:

The Company maintains stock-based compensation plans as disclosed in our Annual Financial Statements. For thethree andsix months ended* November 30, 2023*, the total stock-based compensation was $8,201 and $16,458. For thethree andsix months ended* November 30, 2022,*total stock based compensation was $10,943 and $20,136 respectively.

During thesix months ended* November 30, 2023* the Company granted 11,559,549 time-based RSUs, and 7,566,146 performance-based RSUs (* November 30, 2022 -6,004,995 time-based RSUs and 2,634,744 performance based RSUs). The 7,566,146 performance based RSUs issued during the quarter had performance conditionsnot* yet finalized. The Company's total stock-based compensation expense recognized is as follows:

18

Note16. Accumulated other comprehensive income (loss)

Accumulated other comprehensive loss includes the following components:

Note17. Non-controlling interests

The following tables summarize the information relating to the Company’s subsidiaries, SH Acquisition (68%), CC Pharma Nordic ApS (75%), Aphria Diamond (51%), and ColCanna S.A.S. (90%) before intercompany eliminations.

Summary of balance sheet information of the entities in which there is a non-controlling interest as of* November 30, 2023*:

Summary of balance sheet information of the entities there is a non-controlling interest as of* May 31, 2023*:

19

Summary of income statement information of the entities in which there is a non-controlling interest for thesix months ended* November 30, 2023*:

Summary of income statement information of the entities in which there is a non-controlling interest for thesix months ended* November 30, 2022*:

On* January 5, 2024,Aphria Inc. (“Aphria”), a wholly-owned subsidiary of the Company, entered into an Amended and Restated Wholesale Cannabis Supply Agreement (the “Supply Agreement”) with1974568* Ontario Limited (“Aphria Diamond”), Aphria’s joint venture with Double Diamond Holdings Ltd. The Supply Agreement amends and restates the existing supply agreement, effective as of* September 1, 2023,and amends certain terms relating to pricing and product classes. Due to the terms stipulated in the Supply Agreement, the reduced transfer price will lead to a decrease in income attributable to non-controlling interest over the duration of the agreement. If this agreement had been effective June 1, 2023,*the Company would have recognized approximately $15,000 in additional net income attributed to the Stockholders of Tilray Brands, Inc.

Note18. Income taxes

The determination of the Company’s overall effective tax rate requires significant judgment, the use of estimates, and the interpretation and application of complex tax laws. The effective tax rate reflects the income earned and taxed in various United States federal, state, and foreign jurisdictions. Tax law changes, increases, and decreases in temporary and permanent differences between book and tax items, valuation allowances against the deferred tax assets, stock compensation, and the Company’s change in income in each jurisdiction all affect the overall effective tax rate. It is the Company’s practice to recognize interest and penalties related to uncertain tax positions in income tax expense.

The Company reported income tax (recovery) expense of $(3,380) and $3,884 for thethree andsix months ended* November 30, 2023*, and income tax recovery of $(11,713) and $ (4,502) for thethree andsix months ended* November 30, 2022*. The income tax benefit in the current period varies from the US statutory income tax rate and prior period primarily due to the geographical mix of earnings and losses withno tax benefit resulting from valuation allowances in certain jurisdictions.

20

Note19. Commitments and contingencies

Purchase and other commitments

The Company has payments on long-term debt, refer to Note12 (Long-term debt), convertible notes, refer to Note13 (Convertible debentures payable), material purchase commitments and construction commitments as follows:

Legal proceedings

In the ordinary course of business, we are at times subject to various legal proceedings and disputes, including the proceedings specifically discussed below. We assess our liabilities and contingencies in connection with outstanding legal proceedings utilizing the latest information available. Where it is probable that we will incur a loss and the amount of the loss can be reasonably estimated, we record a liability in our consolidated financial statements. These legal reserves* maybe increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss isnot* probable or the amount of loss isnot estimable, we donot accrue legal reserves. While the outcome of legal proceedings is inherently uncertain, based on information currently available and available insurance coverage, our management believes that it has established appropriate legal reserves. Any incremental liabilities arising from pending legal proceedings arenot expected to have a material adverse effect on our consolidated financial position, consolidated results of operations, or consolidated cash flows. However, it is possible that the ultimate resolution of these matters, if unfavorable,* may*be material to our consolidated financial position, consolidated results of operations, or consolidated cash flows.

There have beenno material changes from the legal proceedings since our Annual Report on Form10-K for the fiscal year ended* May 31, 2023*, except with respect to certain aspects of the legal proceedings disclosed below:

Class Action Suits and Stockholder Derivative Suits

Authentic Brands Group Related Class Action (New York, United States)

On* May 4, 2020,Ganesh Kasilingam filed a lawsuit in the United States District Court for the Southern District of New York (“SDNY”), against Tilray Brands, Inc., Brendan Kennedy and Mark Castaneda, on behalf of himself and a putative class, seeking to recover damages for alleged violations of Sections10*(b) and20(a) of the Securities Exchange Act of1934 (the “Kasilingam litigation”). The complaint alleges that Tilray and the individual defendants overstated the anticipated advantages of the Company’s revenue sharing agreement with Authentic Brands Group (“ABG”), announced on* January 15, 2019,and that the plaintiff suffered losses when Tilray’s stock price dropped after Tilray recognized an impairment with respect to the ABG deal on March 2, 2020.On August 6, 2020,SDNY entered an order appointing Saul Kassin as Lead Plaintiff and The Rosen Law Firm, P.A. as Lead Counsel. Lead Plaintiff filed an amended complaint on October 5, 2020,which asserts the same Sections10*(b) and20(a) claims against the same defendants on largely the same theory, and includes new allegations that Tilray’s reported inventory, cost of sales, and gross margins in its financial reports during the class period were false and misleading because Tilray improperly recorded unsellable “trim” as inventory and understated the cost of sales for its products.

On* September 27, 2021,the U.S. District Court entered an Opinion & Order granting the Defendants’ motion to dismiss the amended complaint in the Kasilingam litigation without prejudice. On December 3, 2021,the lead plaintiff filed asecond* amended complaint alleging similar claims against Tilray and Brendan Kennedy. The defendants moved to dismiss thesecond amended complaint on* February 2, 2022.On September 28, 2022,the Court granted in part and denied in part the defendants’ motion to dismiss thesecond* amended complaint. On* October 12, 2022,*the Company filed a motion for reconsideration and/or interlocutory appeal of this Court decision.

On* August 21, 2023,the U.S. District Court granted Tilray’s motion for reconsideration and dismissed thesecond* amended complaint with leave to amendone final time. On* September 27, 2023,plaintiff filed athird* amended complaint. Tilray continues to believe that all of the underlying claims in the amended complaint are without merit and should be dismissed with prejudice.

21

Legal Proceedings Related to Contractual Obligations

420 Investments Ltd. Litigation

On* February 21, 2020,420 Investments Ltd., as Plaintiff (“420 Investments”), filed a lawsuit against Tilray Brands, Inc. and High Park Shops Inc. as Defendants, in Calgary, Alberta in the Court of Queen’s Bench of Alberta. In August 2019,Tilray and High Park entered into an Arrangement Agreement with420* Investments and others (the “Agreement”). Pursuant to the Agreement, High Park was to acquire the securities of420 Investments. In* February 2020,Tilray and High Park gave notice of termination of the Agreement.420 Investments alleges that the termination was unlawful and without merit and further alleges that the Defendants hadno* legal basis to terminate.420 Investments alleges that the Defendants didnot meet their contractual and good faith obligations under the Agreement.420 Investment seeks damages in the stated amount of C$110,000, plus C$20,000 in aggravated damages. The Tilray and High Park Statement of Defense and counterclaim were both filed on* March 20, 2020.420 Investment’s Statement of Defense to our counterclaim was filed on April 20, 2020.Respectively,420 Investments and Tilray / High Park served each other with their Affidavits of Records on August 25, 2020and November 30, 2020.Tilray and High Park cross-examined the litigation representative of420* Investments. The Company denies the Plaintiff’s allegations and intends to continue to vigorously defend this litigation matter, although there can beno assurance as to its outcome.

In* February 2023,Tilray and High Park filed an Application for Summary Judgment to collect an unpaid C$7,000 bridge loan made to420* Investments on* August 28, 2019,relating to the subject transaction. That debt was repayable in March 2020,but was never repaid. The application is pending and a decision from the Court is expected on Tilray’s Application for Summary Judgment in the calendar year of2024.*

Docklight Litigation Settlement

On* November 5, 2021Docklight Brands, Inc. (“Docklight”) filed a complaint against the Company and its wholly-owned subsidiary, High Park Holdings, Ltd. in Superior Court of the State of Washington, King County. Docklight claimed breach of contract against High Park arising from a2018* license agreement pursuant to which Docklight licensed certain Bob Marley-related brands to High Park (as amended in2020 and2021, the “High Park License”). In addition, Docklight brought a negligent misrepresentation claim against Tilray, alleging that certain individuals at Tilray or Aphria had made false statements to Docklight in order to induce Docklight to waive Docklight’s alleged right to terminate the High Park License for change-of-control on the basis of the2021 Tilray-Aphria Arrangement Agreement. Effective* October 10, 2023,*the parties entered into a settlement agreement pursuant to which the Company paid an aggregate amount equal to $3,000 to Docklight in exchange for mutual releases and a dismissal of the pending Docklight litigation claims.

MediPharm / HEXO Litigation Settlement

In* July 2022,MediPharm Labs Inc. (“MediPharm) and Peter Hwang obtained a judgement for damages against HEXO Inc. in an amount equal to CAD $9,800, together with costs and interest, in connection with HEXO’s alleged failure to pay for certain products. Subsequent to Tilray’s acquisition of HEXO, on October 2, 2023,*MediPharm, HEXO and Tilray reached a settlement of the MediPharm judgment. Specifically, the terms of the settlement consisted of the following: (i) CAD $3,000 cash payment to MediPharm; (ii) issuance to MediPharm of a product supply credit for CAD $1,000 for the purchase of Tilray cannabis products at market pricing; (iii) Tilray acquired all of the outstanding shares of a MediPharm subsidiary in exchange for the issuance by Tilray of 1,573,152 Tilray common shares; (iv) payment of CAD $210 to Peter Hwang; and (v) dismissal of the MediPharm judgment and mutual releases of all claims.

Summary of litigation accruals

As described in Note11 (Accounts payable and accrued liabilities), the total litigation expense accrual included in accrued liabilities as of* November 30, 2023* was $25,338 to cover various ongoing litigation matters that are probable and estimable (* May 31, 2023 - $25,000). During thesix* months ended* November 30, 2023,*the Company assumed $12,253 of litigation accruals from the acquisition of HEXO, several of which were settled in the period as described above. The Company didnot assume any litigation accruals from the Craft Acquisition.

22

Note20. Net revenue

The Company reports its net revenue infour reporting segments: cannabis, distribution, beverage alcohol and wellness.

Net revenue is comprised of:

Note21. Cost of goods sold

Cost of goods sold is comprised of:

Note22. General and administrative expenses

General and administrative expenses are comprised of:

23

Note23. Restructuring charges

In connection with the execution of our acquisition strategy and strategic transactions, the Company has incurred restructuring and exit costs associated with the integration efforts of these non-recurring transactions. The Company recognized $2,655 and $3,570 of restructuring charges for thethree andsix months ended* November 30, 2023*, compared to $8,064 and $8,064 for prior year comparative periods. The Company approves detailed restructuring initiative plans at the executive level and recognizes these expenses in the period in which the plan has been committed to. All amounts incurred as of* November 30**2023,* have been paid.

Within the Cannabis reporting unit,three restructuring plans have been initiated as follows; HEXO acquisition related charges which is expected to take place24 months from the acquisition date, Truss acquisition related charges which is expected to take place18 months from the acquisition date and the Canadian business cost reduction plan, which concluded during the quarter. In thesix month period ended* November 30, 2023,*the following expenses were recognized, $1,221 of employee termination benefits for the HEXO acquisition plan, $1,586 of restructuring charges related to the costs of exiting the facility until the new business has resumed for the Truss acquisition plan and $281 of employee termination benefits for the Canadian business cost reduction plan.

Within the Distribution reporting unit, the Company executed a cost optimization plan during thethree months ended* November 30, 2023.It is expected that this plan will be completed within the current fiscal year. In thesix* month period ended* November 30, 2023,*the Company recognized $482 related to employee termination benefits in association with executing this plan.

For the prior periodthree andsix months ended* November 30, 2022,the Company recognized $8,064 and $8,064 which was comprised of $1,599 of exit cost and $2,758 for inventory adjustments from the termination of our producer partnership in Uruguay due to a breach of the underlying contract in our International cannabis business. Additionally, amounts related to the Tilray-Aphria Arrangement Agreement for the closure of our Canadian cannabis facility in Enniskillen of $1,512 million were incurred. The Company also incurred $2,195 million of write-offs from the exit of our medical device reprocessing business in our distribution reporting segment. These exit costs were completed in the prior year quarter ended November 30, 2022,and didnot* have on going impacts in thesix months ended* November 30, 2023.*

Note24. Non-operating income (expense)

Non-operating income (expense) is comprised of:

Included in other non-operating (losses) gains, net for thethree andsix months ended* November 30, 2023*, are losses of $(967) and $(1,182) resulting from the downside protection share issuance relating to the HTI note, as described in Note15 (Stockholders' equity) and the gain on the settlement of TLRY23 Convertible Notes.

Note25. Fair value measurements

Financial instruments

The Company has classified its financial instruments as described in Note3 Significant accounting policies in our Annual Financial Statements.

The carrying values of accounts receivable, bank indebtedness and accounts payable and accrued liabilities approximate their fair values due to their short periods to maturity.

At* November 30, 2023* and* May 31, 2023* the Company had long-term debt of $4,472 and $3,280, respectively, and the principal portion of convertible debentures payable of $309,240 and $464,070, respectively, subject to fixed interest rates. The Company’s long-term debt is valued based on discounting the future cash outflows associated with the long-term debt. The discount rate is based on the incremental premium above market rates for the U.S. Department of the Treasury securities of similar duration. In each period thereafter, the incremental premium is held constant while the U.S. Department of the Treasury security is based on the then current market value to derive the discount rate.

24

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of* November 30, 2023* and* May 31, 2023* and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

The Company’s financial assets and liabilities required to be measured on a recurring basis are its convertible notes receivable, equity investments measured at fair value, convertible debentures measured at fair value, acquisition-related contingent consideration, and warrant liability.

Convertible notes receivable and long-term investments are recorded at fair value. The estimated fair value is determined using the Black Scholes option pricing model, probability of legalization and is classified as Level3.

Convertible debentures payable are recorded at fair value when elected or required under US GAAP. Specifically, the APHA24 instrument's estimated fair value is determined using the Black-Scholes option pricing model and is classified as Level3.

Certain equity investments recorded at fair value have quoted prices in active markets for identical assets and are classified as Level1. The Company classified securities with observable inputs as Level2 and without a quoted market price as Level3.

The warrants associated with the warrant liability are classified as Level3 derivatives. Consequently, the estimated fair value of the warrant liability is determined using the Black-Scholes pricing model. Until the warrants are exercised, expire, or other facts and circumstances lead the warrant liability to be reclassified to stockholders’ equity, the warrant liability (which relates to warrants to purchase shares of common stock) is marked-to-market each reporting period with the change in fair value recorded in change in fair value of warrant liability. Any significant adjustments to the unobservable inputs disclosed in the table below would have a direct impact on the fair value of the warrant liability.

The contingent consideration from the acquisitions of SweetWater, Montauk, and Truss due in* December 2023,** December 2025,and upon the triggering event if met, respectively and are payable in cash, is determined by discounting future expected cash outflows at a discount rate in the range of 5% -11.4%, and probability of achievement of 25% and 90%. The unobservable inputs into the future expected cash outflows result in a fair value measurement classified as Level3.* During thesix months ended* November 30, 2023,*a decrease in fair value of $10,584, inclusive of changes in foreign exchange, was recognized and was comprised of a decrease of fair value of $13,218 for the contingent consideration from the Sweetwater acquisition as a result of a lower probability of achieving the incentive targets which was offset by an increase in fair value of $2,411 for the contingent consideration from the Montauk acquisition as a result of a higher probability of achieving the incentive targets. Lastly, the addition of $4,181 of contingent consideration liability was assumed as part of the Truss acquisition and an increase in fair value of $223 as a result of foreign exchange.

The balances of assets and liabilities categorized within Level3 of the fair value hierarchy measured at fair value on a recurring basis are reconciled, as follows:

25

The unrealized gain (loss) on fair value for the convertible debenture, the warrant liability, contingent consideration, and debt securities classified under available-for-sale method is recognized in the consolidated statements of loss and comprehensive loss using the following inputs:

Items measured at fair value on a non-recurring basis

The Company's prepaids and other current assets, long lived assets, including property and equipment, goodwill and intangible assets are measured at fair value when there is an indicator of impairment and are recorded at fair value only when an impairment charge is recognized.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There have beenno changes to the Company’s capital management approach in the period. The Company considers its cash and cash equivalents and marketable securities as capital.

Note26. Segment reporting

Information reported to the Chief Operating Decision Maker (“CODM”) for the purpose of resource allocation and assessment of segment performance focuses on the nature of the operations. The Company operates infour reportable segments: (1) cannabis operations, which encompasses the production, distribution, sale, co-manufacturing and advisory services of both medical and adult-use cannabis, (2) beverage alcohol operations, which encompasses the production, marketing and sale of beverage and beverage alcohol products, (3) distribution operations, which encompasses the purchase and resale of pharmaceuticals products to wholesale and pharmacy customers, and (4) wellness products, which encompasses hemp foods and hemp-based cannabidiol (“CBD”) consumer products. This structure is in line with how our Chief Operating Decision Maker (“CODM”) assesses our performance and allocates resources.

Operating segments havenot been aggregated andno asset information is provided for the segments because the Company’s CODM doesnot receive asset information by segment on a regular basis.

26

Segment gross profit from external customers:

Channels of Cannabis revenue were as follows:

On* July 12, 2022,Tilray acquired the HEXO Convertible Note from HTI and also entered into a strategic alliance with HEXO Corp. (“HEXO”) as discussed in Note8* (Convertible notes receivable) and Note13 (Convertible debentures payable). In addition, the Company and HEXO entered into various commercial transaction agreements. On* June 22, 2023,the Company completed the HEXO Acquisition as described in Note7* (Business acquisitions), and thus these commercial arrangements were terminated and HEXO's financial results were consolidated in the current period results.

Included in revenue from Canadian adult-use cannabis is$nil and $1,500 of advisory services revenue for thethree andsix months ended* November 30, 2023,*from the aforementioned HEXO commercial transaction agreements, compared to $7,882 and $15,635 of advisory services revenue in the prior comparative period.

27

Geographic net revenue:

Geographic capital assets:

Major customers are defined as customers that are materially significant to the Company’s annual revenues. For thethree andsix months ended* November 30, 2023and2022*, there wereno major customers representing a material contribution to our quarterly revenues.

Note27. Subsequent Events

On* December 15, 2023and December 21, 2023,the Company exchanged $18,500 aggregate principal of its APHA24* Notes for cancellation by issuing 9,601,538 shares.

On* January 5, 2024,the Company obtained a Waiver from its lender as420* wasnot in compliance with the leverage ratio covenant under the420 Secured Credit Agreement. See*“420* Credit Agreement” discussed in Part II, Item5. Other Information.

On* January 5, 2024,Aphria Inc. (“Aphria”), a wholly-owned subsidiary of the Company, entered into an Amended and Restated Wholesale Cannabis Supply Agreement (the “Supply Agreement”) with1974568* Ontario Limited (“Aphria Diamond”), Aphria’s joint venture with Double Diamond Holdings Ltd. The Supply Agreement amends and restates the existing supply agreement, effective as of* September 1, 2023,and amends certain terms relating to pricing and product classes. See “Aphria Diamond Amended Supply Agreement” discussed in Part II, Item5.* Other Information.

28