Tilray Brands Inc

Notes to Consolidated Financial Statements

Note1. Basis of presentation and summary of significant accounting policies

The accompanying unaudited interim consolidated financial statements reflect the accounts of the Company for the quarterly period ended* February 28, 2025* (the “Financial Statements”). 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, 2024* (the “Annual Report”). These 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 fiscal year.

These Financial Statements have been prepared on a 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 Financial Statements, notes and tables have been rounded to the nearest thousand, except par values and per share amounts, and unless otherwise indicated.

Certain items of the comparative figures have been changed to conform to the presentation adopted in the current period. In limited cases, certain line items that were previously aggregated have been disaggregated within the Consolidated Statements of Cash Flows for the periods presented.

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 all subsidiaries are included in the Financial Statements from the date that control commences until the date that control ceases. All intercompany balances and transactions have been eliminated on consolidation. A complete list of our subsidiaries that existed as of our most recent fiscal year end is included in the Annual Report.

Impairment of goodwill and indefinite-lived intangible assets

Goodwill and indefinite-lived intangible assets are tested for impairment annually, or more frequently when events or circumstances indicate that impairment* mayhave occurred. As part of the impairment evaluation, we mayelect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely thannot* that the fair value of the indefinite-lived intangible asset or the reporting unit (for goodwill) is less than its carrying value, a quantitative impairment test to compare the fair value to the carrying value is performed. An impairment charge is recorded if the carrying value exceeds the fair value. The assessment of whether an indication of impairment exists is performed at the end of each reporting period and requires the application of judgment, historical experience, and external and internal sources of information. We make estimates in determining the future cash flows and discount rates in the quantitative impairment test to compare the fair value to the carrying value.

During the period ended* February 28, 2025*, the Company identified an indicator of impairment with respect to its reporting units and performed an interim impairment test, and determined that the fair value of certain reporting units wasnot greater than their carrying amounts, resulting in an impairment expense of $699,235, see Note6 (Goodwill).

Convertible notes receivable

Convertible notes receivable includes 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 consolidated 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 loss and the remaining amount is recorded in other comprehensive income (loss).

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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 andnine months ended* February 28, 2025* and* February**29,* 2024, the dilutive potential common share equivalents outstanding consisted of the following:21,896,120 and 20,652,315 common shares from RSUs,3,032,559 and 5,744,302 common shares from share options,6,209,000 and 6,209,000 common shares for warrants and 48,738,225 and 72,653,364 common shares for convertible debentures, respectively.

Recently issued accounting pronouncementsnot* yet adopted*

In* August 2023,the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU")2023-05, 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 and 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, including segments' significant expenses on an interim and annual basis. ASU2023*-07 is effective for the Company beginning with its fiscal year ended* May 31, 2025and will be disclosed retrospectively in the Annual Report on Form10*-K filed with the SEC for such period. The Company is in the process of evaluating the impact of the financial statement disclosure requirements.

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* June 1, 2025.*The Company is currently evaluating the effect of adopting this ASU.

In* November 2024,the FASB issued ASU2024*-03,* Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic220-40): Disaggregation of Income Statement Expenses,which requires disaggregated disclosure of income statement expenses for public business entities. ASU2024*-03 is effective for the Company beginning* June 1, 2026.*The Company is currently evaluating the effect of adopting this ASU.

In* November 2024,the FASB issued ASU2024*-04, Debt with Conversion and Other Options (Subtopic470*-20): Induced Conversions of Convertible Debt Instruments,which seeks to clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. ASU2024*-04 is effective for the Company beginning* June 1, 2025.*The Company is currently evaluating the effect of adopting this ASU.

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Note2. Inventory

Inventory consisted of the following:

Note3. Capital assets

Capital assets consisted of the following:

Assets held for sale consisted of the following:

Beginning in the fiscal year ended* May 31, 2024,the Company classified the following assets from its Cannabis reporting segment as held for sale, including its Quebec cultivation facility, the Fort Collins, CO partially vacant warehouse facility, and the Broken Coast former cultivation facility located in Duncan, B.C. Following an assessment of facility capacity utilization, it was determined that these facilities would be exited and held for sale. It is expected that the sale of these assets will be completed withintwelve* months from the period in which they were classified as held for sale. Assets held for sale are measured at the lower of carrying amount and their fair value less costs to sell and areno longer depreciated. Disposition of assets held for sale are recorded in the consolidated statement of loss and comprehensive loss, within the line, “Non-operating income (expense), net”.

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Note4. Leases

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

The following table presents the future undiscounted payments associated with lease liabilities as of* February 28, 2025*:

Note5. Intangible Assets

Intangible assets consisted of the following items:

Included in licenses, permits & applications are multi-period sponsorship rights of $15,047 and indefinite-lived intangible assets of $173,707 as of* February 28, 2025*, compared to$nil and $182,851 as of* May 31, 2024*, respectively.

Expected future amortization expense for intangible assets as of* February 28, 2025* is as follows:

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Note6. Goodwill

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

Based upon a combination of factors including a sustained decline in the Company’s market capitalization stemming from the uncertainty resulting from certain changes in U.S. global economic policy, including slower than anticipated progress in global cannabis legalization and overall declines in the craft beer industry sector, the Company concluded that it is more likely thannot**, that the fair value of our reporting units were less than their carrying amounts as of* February 28, 2025**.* Accordingly, the Company utilized the income approach, which uses future discounted cash flows, to determine the fair value of each reporting unit. As a result, the Company recorded non-cash impairment charges of $570,000 of cannabis goodwill, $100,000 of beverage goodwill, $25,000 of wellness goodwill and $4,235 of distribution goodwill for thethree andnine months ended* February 28, 2025**.* The non-cash charge hadno impact on the Company’s compliance with debt covenants at* February 28, 2025*, its cash flows or available liquidity.

In the Company's cannabis goodwill assessment, the Company used a discount rate of 12.00%, a terminal growth rate of 5%, and an average revenue growth rate of 34% over 5 years, based on an 88% and 40% average probability of anticipated EU and U.S. cannabis legalization, respectively and/or changes in drug policy in various countries within the next5 years. A1% increase in the discount rate would result in an additional $285,000 in impairment, a1% decrease in the terminal growth rate would result in an additional $210,000 in impairment, a5% decrease in the average growth rate would result in an additional $170,000 in impairment, a5% decrease in the probability of EU cannabis legalization would result in an additional $80,000 in impairment and a5% decrease in the probability of US cannabis legalization would result in an additional $7,000 in impairment. Changes to those probabilities resulting in continued delays in or cessation of legalization of cannabis within the United States and internationally, or adverse regulatory changes to existing legislation, could have an unfavorable impact on the estimated future cash flows, and ultimately, the fair value of the cannabis reporting unit, which* may*result in a material impairment expense recognized in future reporting periods.

In the Company's beverage goodwill assessment, the Company used a discount rate of 9.25%, a terminal growth rate of 2%, and an average revenue growth rate of 12% over 5 years. A1% increase in the discount rate would result in an additional $70,000 in impairment, a1% decrease in the terminal growth rate would result in an additional $50,000 in impairment and a1% decrease in the average growth rate would result in an additional $40,000 in impairment.

In the Company's wellness goodwill assessment, the Company used a discount rate of 10.50%, a terminal growth rate of 2%, and an average revenue growth rate of 7% over 5 years. A1% increase in the discount rate would result in an additional $5,000 in impairment, a1% decrease in the terminal growth rate would result in an additional $3,000 in impairment and a1% decrease in the average growth rate would result in an additional $2,000 in impairment.

In the Company's distribution goodwill assessment, the Company recorded $4,235 of impairments which brought the remaining distribution goodwill balance to$nil.

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Note7. Business a****cquisitions

Acquisition of Craft**Beverage Business Portfolio

On* September 29, 2023,*Tilray acquired a portfolio of beverage brands, assets and businesses comprising eight craft 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 of $83,658 in cash, net of a working capital adjustment at closing of $1,342.

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

In the event that the Craft Acquisition had occurred on* June 1, 2023,the Company would have had, on an unaudited proforma basis, additional net revenue of approximately$nil and $55,000 for thethree* andnine months ended* February29,* 2024, respectively, and its consolidated net loss and comprehensive net loss would have increased by approximately$nil and $5,000 for thethree andnine months ended* February29,* 2024, respectively. This unaudited pro forma financial information doesnot reflect the realization of any expected ongoing synergies relating to the integration of the Craft Acquisition.

Acquisition of Craft**Beverage Business Portfolio II

Effective* September 1, 2024,*the Company acquired four craft beer brands and breweries from Molson Coors Beverage Company (“Molson”) including Atwater Brewery, Hop Valley Brewing Company, Terrapin Beer Co., and Revolver Brewing (the “Craft Acquisition II”). The purpose of the acquisition was to continue broadening Tilray's beverage brand strategy. In consideration for the acquisition, the Company paid a total purchase price of $23,079 in cash, which is subject to certain customary post-closing working capital adjustments.

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 II at the effective acquisition date as follows:

In the event that the Craft Acquisition II had occurred on* June 1, 2023,the Company would have had, on an unaudited proforma basis, additional net revenue of approximately$nil and $13,700 for thethree* andnine months ended* February 28, 2025* and approximately $11,000 and $42,000 for thethree andnine months ended* February29,* 2024, respectively, and its consolidated net loss and comprehensive net loss would have increased by approximately$nil and $4,000 for thethree andnine months ended* February 28, 2025* and approximately $6,600 and $16,200 for thethree andnine months ended* February29,* 2024, respectively. This unaudited pro forma financial information doesnot reflect the realization of any expected ongoing synergies relating to the integration of the Craft Acquisition II.

Note8. Convertible notes receivable

Convertible notes receivable is comprised of the following:

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MedMen Convertible Note

On* August 31, 2021,the Company issued 9,817,061 shares valued at $117,804 to acquire a 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.

During thethree andnine months ended* February 28, 2025*, the company recognized an other-than-temporary change in fair value, which resulted in a non-cash expense of $20,000 compared to $42,681 for thethree andnine months ended* February**29,* 2024. The MedMen Convertible Note was valued based upon the fair value of the collateral assets net of disposal costs and has been reduced to reflect recent developments in restructuring efforts.

As previously disclosed, MedMen and certain of its subsidiaries commenced insolvency actions in* April 2024.On January 16, 2025,MedMen exited receivership and substantially all of its remaining assets were transferred to a new entity owned by MedMen’s secured creditors, including SH Acquisition. In connection with the foregoing, the Company disposed of its MedMen Convertible Note in exchange for an option to acquire a 68% membership interest in SH Acquisition for $1.00 upon U.S. federal cannabis legalization. See Note9* (Long-term investments). As a result, the Companyno longer controls SH Acquisition and thusno longer consolidates this entity for accounting purposes. See Note17 (Non-controlling interests).

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 and/or its option to acquire SH Acquisition. In addition, since the fiscal year ended* May 31, 2024,the Company hasnot* recognized any interest income on the MedMen Convertible Note, nor did the Company recognize any interest income for thethree andnine months ended* February 28, 2025*, which would have increased its value.

Note9. Long term investments

Long term investments consisted of the following:

As of* February 28, 2025,included within equity investment under measurement alternative is an option to acquire a 68% membership interest in SH Acquisition for $1.00 upon U.S. federal cannabis legalization valued at $8,160. See Note25* (Fair value measurements).

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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* February 28, 2025*, the Company hasnot drawn on the line of credit. The operating line of credit is secured by a security interest on certain real property located at265 Talbot St. West, Leamington, Ontario.

CC Pharma GmbH, a subsidiary of the Company, hastwo operating lines of credit in the amounts of€7,000 and€500. These lines bear interest at Euro Short-Term Rate (“ESTR”) plus 2.50% and Euro Interbank Offered Rate (“EURIBOR”) plus 4.00%, respectively. As of* February 28, 2025*, a total of€7,442 ($7,740) was drawn down from the total available credit of€7,500. The operating line of credit for€7,000 is secured by an interest in the inventory of CC Pharma GmbH as well as the Densborn, Germany production facility and underlying real property. The operating line of credit for€500 is unsecured.

American Beverage Crafts Group Inc. (“ABC Group”), a subsidiary of the Company, has a revolving credit facility of $30,000, which bears interest at SOFR plus an applicable margin. As of* February 28, 2025*, the Company had drawn down $3,000 on the revolving line of credit. The revolving credit facility is secured by ABC Group'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:

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Note12. Long-term debt

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

The Company, entered into a secured credit agreement on* November 28, 2022,for a credit facility through its 51% owned subsidiary Aphria Diamond Inc. (“Aphria Diamond”). The principal amount of loans outstanding is secured by the property at620* Country Road14, Leamington, Ontario, owned by Aphria Diamond and a guarantee from Aphria Inc. During the period ended* February 28, 2025,the Company refinanced this debt by entering into a new Credit Agreement. The Credit Agreement provides for a term loan equal to CAD $53,000 with a maturity date of February 21, 2028.*The Company used CAD $48,171 of the proceeds from the Credit Agreement to repay in full all outstanding obligations under the prior credit facility.

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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, 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 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.

On* September 12, 2024and November 4, 2024**,* the Company exchanged $7,500 and $9,000 of its TLRY27 Notes for cancellation, respectively, by issuing 10,034,635 shares of Common Stock and paying $290 in cash to settle both principal and accrued interest. Upon exchanging the TLRY27 Notes, a portion of the settlement consideration was allocated to the equity component of the instrument and was recognized as a $4,931 reduction of additional paid-in capital in the Consolidated Statements of Stockholders’ Equity. Additionally, this repurchase resulted in a gain of $679 which was recorded in other non-operating (losses) gains, net as shown in Note24 (Non-operating income (expense)). Following consummation of the exchange, the number of outstanding Borrowed Shares of Common Stock was reduced by 3,682,609 shares which were then returned as Treasury Stock.

During thethree months ended* February 28, 2025,the Company exchanged an aggregate $26,600 of its TLRY27* Notes for cancellation, by issuing 27,136,770 shares of Common Stock and paying $212 in cash to settle both principal and accrued interest. Upon exchanging the TLRY27 Notes, a portion of the settlement consideration was allocated to the equity component of the instrument and was recognized as a $7,442 reduction of additional paid-in capital in the Consolidated Statements of Stockholders’ Equity. Additionally, this repurchase resulted in a gain of $2,432 which was recorded in other non-operating (losses) gains, net as shown in Note24 (Non-operating income (expense)). Following consummation of the exchange, the number of outstanding Borrowed Shares of Common Stock was reduced by 5,936,812 shares which were then returned as Treasury Stock. As of* February 28, 2025and May 31, 2024,*a total of 28,880,580 and 38,500,000 shares remained outstanding under the share lending arrangement, respectively.

During thethree andnine months ended* February 28, 2025*, the Company recognized interest expense of $1,957 and $6,332 and accretion of amortized discount interest of $2,766 and $8,751, respectively. During thethree andnine months ended* February**29,* 2024, the Company recognized interest expense of $2,243 and $6,728 and accretion of amortized discount interest of $2,896 and $8,520, respectively.

As at* February 28, 2025,there was $129,400 principal outstanding compared to $172,500 principal outstanding as at May 31,*2024 under the TLRY27 Notes.

APHA24* Notes*

The APHA24 convertible debentures, were entered into in* April 2019,in the principal amount of $350,000, bore interest at a rate of 5.25% per annum, and were payable semi-annually in arrears on June 1and December 1of each year, and matured on June 1, 2024 (the "APHA24* Notes"). On* June 1, 2024,the Company repaid the remaining principal of the APHA24* Notes in cash upon maturity.

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Note14. Warrant liability

As of* February 28, 2025* and* May 31, 2024,there were 6,209,000 warrants outstanding, with an original exercise price of $5.95 per warrant, expiring September 17, 2025.*Each warrant is exercisable forone share of Common Stock 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 thenine months ended* February 28, 2025*, the Company issued shares of its Common Stock which triggered the anti-dilution price protection feature and, accordingly, lowered the exercise price of each warrant to $0.90. 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 the Securities Act of1933, as amended. 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.

Using the Black Scholes pricing model (Level3), the Company has estimated the fair value of the warrants outstanding as of* February 28, 2025* to be $0.06 per warrant. In applying the Black Scholes pricing model (Level3), the Company utilized the following assumptions: a risk-free interest rate of 2.55%, an expected volatility of 50%, an expected term of 0.55 years, strike price of $0.90 and fair value of Common Stock of $0.74.

The expected volatility assumption utilized in the Black Scholes pricing model (Level3) was calculated using both the historical and implied volatility of the Company’s Common Stock.

Note15. Stockholders' equity

Issued and outstanding

Pursuant to its Fifth Amended and Restated Certificate of Incorporation, the total number of shares that the Company is authorized to issue is 1,426,000,000 shares, of which 1,416,000,000 shares are Common Stock (the “Common Stock”), and 10,000,000 shares of which are Preferred Stock (the “Preferred Stock”). As of* February 28, 2025*, the Company had issued and outstanding 983,372,617 shares of Common Stock,9,619,421 shares of Treasury Stock (the “Treasury Stock”) andno Preferred Stock. Historically, the Company has issued shares of its Common Stock in consideration for acquisitions and other strategic transactions, settlement of convertible notes, settlement of litigation claims, in connection with public offerings and as payment of dividends to non-controlling interests for profit distributions.

During thenine months ended* February 28, 2025*, the Company issued the following shares of Common Stock:

During thenine months ended* February 28, 2025*, the Company granted 13,505,127 time-based Restricted Stock Units (“RSUs”), andno performance-based RSUs. During thenine months ended* February29,* 2024, the Company granted 11,665,159 time-based RSUs and 7,566,146 performance-based RSUs. In connection with the 7,566,146 performance-based RSUs that were issued, the performance conditions associated with such awards willnot be determined and adopted until a future date and, therefore, the grant date hasnot been met for accounting purposes andno amounts have been recorded within the Consolidated Statement of Loss. The Company's total stock-based compensation expense from RSUs incurred for thethree andnine months ended* February 28, 2025* was $4,035 and $18,189, respectively, compared to $8,059 and $24,517 for thethree andnine months ended* February29,* 2024, respectively.

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Note16. Accumulated other comprehensive income (loss)

Accumulated other comprehensive income (loss) is comprised of foreign currency translation gain (loss) as follows:

Note17. Non-controlling interests

The following are majority-owned subsidiaries of the Company and the percentage of ownership interest maintained by the Company is set forth in the parenthetical: Aphria Diamond (51%), and Colcanna S.A.S. (90%).

On* January 7, 2025,*the Company dissolved its 75% ownership interest in CC Pharma Nordic ApS., and as a result, the Company no longer controls CC Pharma Nordic ApS. and thus no longer consolidates this entity.

On* January 16, 2025,MedMen exited receivership and substantially all of its remaining assets were transferred to a new entity owned by MedMen’s secured creditors, including SH Acquisition. In connection with this restructuring, the Company disposed of its MedMen Convertible Note in exchange for on option to acquire a 68% membership interest in SH Acquisition for $1.00 upon U.S. federal cannabis legalization. See Note8* (Convertible notes receivable). As a result, the Companyno longer controls SH Acquisition and thusno longer consolidates this entity.

The following table provides a summary of certain balance sheet information before intercompany eliminations relating to the above referenced majority-owned subsidiaries of the Company in which there was a non-controlling interest as of* February 28, 2025*:

The following table provides a summary of certain balance sheet information before intercompany eliminations relating to the above referenced majority-owned subsidiaries of the Company in which there was a non-controlling interest as of* May 31, 2024*:

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The following table provides a summary of certain income statement information before intercompany eliminations relating to the above referenced majority-owned subsidiaries of the Company in which there was a non-controlling interest for thenine months ended* February 28, 2025*:

The following table provides a summary of certain income statement information before intercompany eliminations relating to the above referenced majority-owned subsidiaries of the Company in which there was a non-controlling interest for thenine months ended* February**29,* 2024:

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 expense of $1,203 and $4,125 for thethree andnine months ended* February 28, 2025*, and income tax (recovery) expense of $(2,871) and $1,013 for thethree andnine months ended* February**29,* 2024. 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.

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Note19. Commitments and contingencies

Purchase and other commitments

The Company has financial commitments on long-term debt, refer to Note12 (Long-term debt), convertible notes, refer to Note13 (Convertible debentures payable), material purchase commitments inclusive of multi-period sponsorship rights 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 in the legal proceedings since our Annual Report on Form10-K for the fiscal year ended* May 31, 2024* or subsequent Quarterly Reports on Form10-Q, except with respect to the legal proceedings disclosed below:

Aphria Securities Class Action (Canada)

In* February 2019,a putative securities class action was commenced in the Ontario Superior Court of Justice against Tilray’s wholly-owned subsidiary, Aphria, Inc. (“Aphria”), and certain of its former officers and directors (the “Aphria Canadian Class Action”). The Aphria Canadian Class Action was subsequently amended in September 2022to proceed only against Aphria andtwo* of its former officers and directors as named defendants.

The class plaintiff sought damages in the amount of CAD $875,000 pursuant to Ontario securities legislation on behalf of all class members who acquired Aphria’s common shares between* January 29, 2018and December 3, 2018.The Aphria Canadian Class Action stemmed from Aphria’s acquisition of Nuuvera Inc. and LATAM Holdings Inc. in Marchand September 2018,respectively, alleging that the value of the acquired assets was misrepresented as being significantly higher than their actual worth, and that insiders at Aphria personally benefitted from the acquisitions at the expense of investors. Aphria and the individual defendants denied the allegations made in the Aphria Canadian Class Action and vigorously defended against them. Trial was scheduled to begin in January 2025.*

On* February 5, 2025,Aphria and the individual defendants successfully reached an agreement with the class plaintiff to settle the Aphria Canadian Class Action. The settlement agreement provides for the complete dismissal of the Aphria Canadian Class Action, with prejudice, in exchange for an aggregate payment from all defendants equal to CAD $30,000, or approximately US $21,000, (the “Settlement Amount”). The settlement agreement also provides for the dismissal, with prejudice, of thefour* individual Canadian lawsuits pursuing the same allegations of wrongdoing against Aphria and former and current officers and directors. The settlement doesnot constitute an admission of liability or wrongdoing by Aphria or the other defendants.

The Settlement Amount will be primarily funded by the outstanding balance under Aphria’s D&O Insurance Policy and by the individual defendants. Aphria will fund the remaining unpaid portion of the Settlement Amount, currently estimated to equal approximately CAD $8,300 (or approximately US $5,800). The settlement agreement was approved by the Court on* March 27, 2025.*

Summary of litigation accruals

As described in Note11 (Accounts payable and accrued liabilities), the total estimated litigation expense accrual included in accrued liabilities as of* February 28, 2025* and* May 31, 2024*was $14,787 and $24,378, respectively. This estimated accrual is intended to cover various ongoing litigation matters with probable losses that can be reasonably estimated.

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Note20. Net revenue

The Company reports Net revenue infour reporting segments: beverage, cannabis, distribution, and wellness. Net revenue for thethree andnine months ended* February 28, 2025* and* February**29,* 2024 were as follows:

Note21. Cost of goods sold

The Company reports Cost of goods sold infour reporting segments: beverage, cannabis, distribution, and wellness. Cost of goods sold for thethree andnine months ended* February 28, 2025* and* February**29,* 2024 were as follows:

Note22. General and administrative expenses

General and administrative expenses for thethree andnine months ended* February 28, 2025* and* February**29,* 2024 were as follows:

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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 transactions. In connection with these efforts, the Company recognized $6,133 and $17,249 of restructuring charges for thethree andnine months ended* February 28, 2025* compared to $5,178 and $8,748 for the prior year period. All restructuring plans are approved at the executive level, and their associated expenses are recognized in the period in which the plan is committed. All amounts incurred as of* February 28, 2025* have been paid.

Within the Cannabis segment, our restructuring costs predominantly related to the HEXO acquisition, which are expected to be completed within24 months from the original acquisition, which occurred* June 2023.In thenine* months ended* February 28, 2025,we recognized $7,872 of expenses related to employee termination severance and benefits and other costs related to the conversion of the HEXO Quebec cultivation facility from cannabis to produce (which is currently held for sale), the optimization of our Redecan facilities, and $771 of restructuring charges related to the remaining costs of exiting the Truss Beverage Co. (“Truss”) facility following its sale to athird* party in the fiscal year ended* May 31, 2024.Additionally, the Company recognized $1,133 of cost associated with the winding down of our Avanti facility, the closure of which was announced during the quarter ended November 30, 2024.Lastly, the Company recognized $351 of restructuring charges related to our decision to exit the New Zealand medical cannabis market announced during the quarter ended February 28, 2025*.

Within the Beverage segment, the Company recognized $1,089 of expenses related to employee termination severance and benefits and $2,765 of costs associated with the consolidation of production sites through the integration of the Craft Acquisition and the Craft Acquisition II. Additionally, the Company recognized $800 of restructuring charges related to terminating a legacy storage agreement from the Craft Acquisition. We expect to transition to a new storage facility in thefourth quarter of our fiscal year ending* May 31, 2025.*

Within the Distribution segment, the Company recognized $374 of restructuring charges related to the divestiture of its retail pharmacy location in Argentina.

Lastly, for thenine months ended* February 28, 2025,*the Company recognized $2,094 of costs associated with the investment held in Superhero Acquisition Corp. as a result of MedMen’s ongoing restructuring and liquidation undertakings.

Note24. Non-operating income (expense), net

Non-operating income (expense), net for thethree andnine months ended* February 28, 2025* and* February**29,* 2024 were as follows:

The other non-operating (losses) gains, net for thethree andnine months ended* February 28, 2025*, were gains of $2,404 and $2,219, respectively, and were mainly comprised of a $3,111 gain resulting from the exchange transaction of the TLRY27 Note. Included in other non-operating (losses) gains, net for thethree andnine months ended* February**29,* 2024, are losses of $(8,245) and $(9,427) which is comprised of $2,313 from the downside protection share issuance relating to the HTI note, $2,458 of amounts to settle outstanding notes with non-controlling interest shareholders, and $4,638 for a decrease in value of equity investee, Cannfections.

Note25. Fair value measurements

Financial instruments

The Company's classification of its financial instruments is described in Note3 (Significant accounting policies) in the Notes to our Annual Financial Statements.

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

On* February 28, 2025* and* May 31, 2024*, the Company had long-term debt of$2,621 and $3,568, respectively, and the principal portion of convertible debentures payable of $129,400 and $172,830, 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.

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The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of* February 28, 2025* and* May 31, 2024* 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 by assessing the collateral entitlement from the asset and is classified as Level3. During thenine months ended* February 28, 2025*, an impairment to convertible notes receivable of $20,000 was recognized, compared to an impairment of $42,681 in the period ended* February**29,* 2024. Subsequent to which in* January 2025,MedMen exited receivership and substantially all of its remaining assets were transferred to a new entity owned by MedMen’s secured creditors, including SH Acquisition. In connection with the foregoing, the Company disposed of its MedMen Convertible Note in exchange for on option to acquire a 68% membership interest in SH Acquisition for $1.00 upon U.S. federal cannabis legalization. See Note9* (Long-term investments). This option was recorded as a Level3 equity investment measured at fair value of $8,160 by assessing the discounted cash flows of SH Acquisition.

Convertible debentures payable are recorded at fair value when elected or required under US GAAP. Specifically, the APHA24 instrument's estimated fair value was determined using the Black-Scholes option pricing model and was 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 as the change in fair value of warrant liability within the consolidated statements of loss and comprehensive loss. 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.

A portion of the consideration to be paid in connection with the Company’s acquisition of Montauk Brewing Company (“Montauk”) is contingent upon the achievement of certain financial measures as of* December 2025.If achieved, such contingent consideration is payable in cash. The contingent consideration amount was estimated by applying a probability of achievement of 100% on the $15,000 sales earn-out component and 0% on the remaining criteria, which isnot* expected to be achieved. The unobservable inputs into the future expected cash outflows result in a fair value measurement classified as Level3.

During thenine months ended* February 28, 2025*, a decrease in fair value of$nil was recognized compared to a decrease of fair value of $13,493 in the period ended* February**29,* 2024, inclusive of changes in foreign exchange. The decrease was comprised of a decrease of fair value of $16,218 for the contingent consideration from the Sweetwater Brewing Company acquisition as a result ofnot achieving the incentive targets and the settlement of $4,181 of contingent consideration liability from the Truss acquisition in cash for $760 (CAD $1,041), which was offset by an increase in fair value of $3,111 for the contingent consideration from the Montauk acquisition as a result of a higher probability of achieving the incentive targets.

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 for the period ended* February 28, 2025*:

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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 for the period ended* February**29,* 2024:

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) beverage operations, which encompasses the production, marketing and sale of beverage and beverage products, (2) cannabis operations, which encompasses the cultivation, production, distribution, sale, co-manufacturing and advisory services of both medical and adult-use cannabis, (3) distribution operations, which encompasses the purchase and resale/distribution of pharmaceuticals products to wholesale and pharmacy customers, and (4) wellness products, which encompasses hemp foods and hemp-derived consumer products. This structure is in line with how our CODM assesses our performance and allocates resources.

Operating segments havenot been aggregated and asset information by segment isnot disclosed because such information isnot reported to or used by the Company’s CODM for the purposes of assessing segment performance or allocating resources.

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Segment gross profit from external customers:

Channels of Cannabis revenue were as follows:

There wereno advisory services revenue associated with the HEXO commercial transaction agreements for thethree andnine months ended* February 28, 2025*. There were$nil and $1,500 in advisory services revenue associated with the HEXO commercial transaction agreements for thethree andnine months ended* February**29,* 2024.

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Geographic net revenue:

Geographic capital assets:

Major customers are defined as customers that are materially significant to the Company’s annual revenues. For thethree andnine months ended* February 28, 2025and2024*, there wereno major customers representing a material contribution to our quarterly revenues.

Note27. Subsequent Events

From* March 5, 2025to March 17, 2025,Tilray issued an aggregate of 22,802,671 shares of the Company’s common stock in exchange for $15,000 aggregate principal amount of the TLRY27* Notes. The remaining principal outstanding as a result of these transactions was $114,400.

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