Tilray Brands, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note1. Basis of presentation and summary of significant accounting policies

The accompanying unaudited condensed interim consolidated financial statements reflect the accounts of the Company for the quarterly period ended* August 31, 2026* (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, 2026* (the “Annual Report”). These Financial Statements reflect all adjustments, which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. Interim results arenot necessarily indicative of results for the full fiscal year.

The Financial Statements have been prepared on a going concern basis, which assumes that the Company will continue in operation for at leastone year after the date the Financial Statements are issued 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, and the accompanying notes and tables have been rounded to the nearest thousand, except par values and per share amounts, and unless otherwise indicated.

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. In certain circumstances, such as with the BrewDog US acquisition, the Company* mayalso consolidate an entity or a group of acquired assets and assumed liabilities where the Company has obtained effective control over the relevant operations, notwithstanding that certain regulatory approvals, licensing transfers, or other administrative matters remain pending as of the date control is obtained. In such cases, consolidation commences on the date the Company obtains the power to direct the relevant activities and is exposed to the variable returns of the operations, consistent with the guidance in ASC810* and, where applicable, the acquisition date determined under ASC805, see Note7 (Business acquisitions).

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.

Restricted cash

We classify cash that is legally or contractually restricted as to withdrawal or usage as restricted cash. As of* August 31, 2026*, the Company reported $3,383 of restricted cash related to the funds held in escrow in connection with the acquisition of BrewDog plc (“BrewDog”), which was completed on* March 2, 2026.See Note7* (Business acquisitions).

Reverse stock split

Effective* December 2, 2025,the Company implemented a reverse stock split of its outstanding shares of Common Stock, at a ratio ofone*-for-ten (the “Reverse Stock Split”).

No fractional shares were issued in connection with the Reverse Stock Split. Fractional shares resulting from the Reverse Stock Split were rounded down to the nearest whole share and stockholders received cash in lieu of any fractional shares that were created by the Reverse Stock Split. Each stockholder's percentage ownership interest in the Company and proportional voting power remained unchanged as a result of the Reverse Stock Split, except for adjustments that resulted from rounding fractional shares down to whole shares.

All issued and outstanding Common Stock, per share amounts, and outstanding equity instruments and awards exercisable into common stock the (“Common Stock”) contained in the Financial Statements of the Company and notes thereto have been retroactively adjusted to reflect the Reverse Stock Split for all prior periods presented.

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 period. 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 Note12 (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 income (loss) attributable to Tilray shareholders is reported as the inclusion of the common share equivalents would be anti-dilutive. For thethree months ended* August 31, 2026* and* August 31,* 2025, the dilutive potential common share equivalents outstanding consisted of the following:11,354,193 and 5,210,722** common shares from RSUs,301,604 and 303,201 common shares from share options, nil and 620,900 common shares for warrants and 2,410,240 and 3,766,478 common shares for convertible debentures, respectively. Prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on December 2, 2025.

New accounting pronouncements not yet adopted

In* November 2024,the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)2024-03, 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 with its fiscal year ended* May 31, 2028and will be disclosed in the Annual Report on Form10*-K for such period and interim periods thereafter. The Company is currently evaluating the effect of adopting this ASU.

New accounting pronouncements recently 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**,* however, it didnot have a material impact on the Company’s Financial Statements.

In* July 2025,the FASB issued ASU2025*-05, Financial Instruments - Credit Losses (Topic326): Measurement of Credit Losses for Accounts Receivable and Contract Assets (“ASU2025-05”), which provides a practical expedient for estimating credit losses on current accounts receivable and current contract assets arising from transactions accounted for under ASC606, Revenue from Contracts with Customers. ASU2025-05 became effective for the Company on* June 1, 2026**,* however, it didnot have a material impact on the Company’s Financial Statements.

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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:

During the fiscal year ended* May 31, 2026*, the Company classified certain assets of its Atwater Brewing business, which are assets contained within its Beverage reporting unit having a carrying value of $2,449, as assets held for sale. These assets were acquired onSeptember 1, 2024 in connection with the transaction referred to as “Craft Acquisition II.” Following management’s assessment of facility utilizations, it was determined that such assets would be held for sale. Assets held for sale are measured at the lower of carrying amount and the fair value less costs to sell and areno longer depreciated. Changes in the carrying amount are recorded in the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss).

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Note4. Leases

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

Included in total lease liabilities is $985 related to disposal groups classified as held for sale. See Note3 (Capital Assets).* *

The following table presents the future undiscounted payments associated with lease liabilities as of* August 31, 2026*:

Note5. Intangible Assets

Intangible assets consisted of the following items:

As of* August 31, 2026* and* May 31, 2026*, the Company also held the following intangible assets which have been fully impaired: $444,208 of customer relationships and distribution channels, $367,022 of licenses, permits and applications, and $452,530 of intellectual property, trademarks, know-how and brands.

As of* August 31, 2026*, the Company reported, in licenses, permits & applications, multi-period sponsorship rights of $17,458 and$nil of indefinite-lived intangible assets compared to $18,783 and$nil as of* May 31, 2026*, respectively.

Expected future amortization expense for intangible assets as of* August 31, 2026* is as follows:

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Note6. Goodwill

The following table reflects the carrying amount of goodwill for the Cannabis reporting unit:

During the fiscal quarter ended* August 31, 2026*, the Company assessed for indicators of impairment and concluded that there wereno such indicators and, accordingly, no further impairment testing was required andno impairment charges were recognized during the period.

The Company performed the annual impairment test during thefourth quarter ended* May 31, 2026* by completing a qualitative assessment of relevant events and circumstances. Based on this assessment, the Company determined that it wasnot more likely thannot that the fair value of the Cannabis reporting unit was less than its carrying amount. Accordingly,no further goodwill impairment testing was performed andno goodwill impairment charges were recognized during the period.

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Note7. Business a****cquisitions

Acquisition of BrewDog

BrewDog UK I

On* March 2, 2026,Tilray Brands UK Ltd (“Tilray UK”), a wholly-owned subsidiary of the Company, entered into a Business and Asset Sale Agreement (the “BrewDog BASA”) pursuant to which Tilray UK acquired certain business operations and assets of BrewDog plc and certain of its subsidiaries (collectively, the “BrewDog Group”) through a pre-packaged administration process in Scotland under the Insolvency Act1986,* with the intent for Tilray UK to carry on the acquired business operations and assets as a going concern (the “BrewDog Acquisition”). The assets acquired included the brewery and distillery located in Ellon, Aberdeenshire, Scotland (the “UK Brewery”), the on-line business, the retail business,11 of the BrewDog strategic pubs in Scotland, England and Ireland and all the world-wide intellectual property rights relating to the BrewDog brand, including sub-brands such as Punk IPA, Hazy Jane, Wingman, Elvis Juice and Dead Pony Club. The purpose of the acquisition is to broaden Tilray’s beverage brand strategy into international markets. In consideration for the BrewDog Acquisition, the Company paid a total purchase price of£33,000 ($44,220), paid in cash at completion.

BrewDog Australia

On* March 9, 2026,*Tilray Australia New Zealand Pty Ltd, a wholly-owned subsidiary of the Company, acquired BrewDog Brewing Australia Pty Ltd., which included BrewDog’s brewery andtwo hospitality venues in Australia. The purpose of the acquisition is to continue broadening Tilray’s beverage brand strategy into international markets. In consideration for the acquisition, the Company paid nominal consideration.

BrewDog UK II

On* March 23, 2026,*Tilray UK acquired five additional BrewDog pubs in Scotland and England. The purpose of the acquisition is to broaden Tilray’s beverage brand strategy into international markets. The Company paid a total purchase price of£418 ($560), paid in cash at completion.

BrewDog U.S.

On* March 16, 2026,Tilray BrewDog U.S., Inc., a wholly-owned subsidiary of the Company, entered into an asset purchase agreement to acquire certain strategic BrewDog assets in the U.S., including a brewery, pub, and hotel in Columbus, Ohio, as well as pubs located in New Albany, Ohio, Cleveland, Ohio, and Las Vegas, Nevada (the “BrewDog U.S. Acquired Assets”). The Company obtained control of the BrewDog U.S. Acquired Assets and assumed certain liabilities, commencing on April 1, 2026,which represents the acquisition date for accounting purposes under ASC805,* notwithstanding certain regulatory approvals that remained pending as of that date. The purpose of the acquisition is to broaden Tilray’s beverage brand strategy. In consideration for the acquisition, the Company paid a total purchase price of $9,293 for the BrewDog’s U.S. Acquired Assets, subject to customary post‑closing adjustments.

In connection with the BrewDog Acquisition and the acquisitions of BrewDog Australia, BrewDog UK II and BrewDog U.S. (collectively, the “Global BrewDog Acquisitions”), 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 Global BrewDog Acquisitions as of the effective acquisition dates as follows:

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In the event that the Global BrewDog Acquisitions had occurred on* June 1, 2025,the Company would have had, on an unaudited pro forma basis for the asset groups purchased, additional net revenue of approximately $64,838* for thethree months ended August 31, 2025,and its consolidated net income (loss) and comprehensive net income (loss) would have increased by approximately $9,807 for thethree months ended* August 31, 2025.This unaudited pro forma financial information doesnot* reflect the realization of any expected ongoing synergies relating to the integration of the Global BrewDog Acquisitions.

Acquisition of Lyphe

On* April 15, 2026,*Tilray Lyphe UK Limited, an indirect wholly-owned subsidiary of the Company, acquired the Lyphe Group (“Lyphe”), a UK-based medical cannabis clinic and digital pharmacy platform (the “Lyphe Acquisition”). In consideration for the Lyphe Acquisition, the Company paid a total purchase price of $3,074 (£2,200), consisting of 398,666 shares of the Company’s common stock having a value of $2,795 as of the date of issuance and $279 of cash. The purpose of the acquisition was driven by a strategic rationale tied to growth, vertical integration, and expansion in Europe, especially the UK medical cannabis market.

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. The table below summarizes the preliminary estimated fair value of the assets acquired and the liabilities assumed in connection with the Lyphe Acquisition as of the effective acquisition date as follows:

In the event that the Lyphe Acquisition had occurred on* June 1, 2025,the Company would have had, on an unaudited pro forma basis, additional net revenue of approximately $768 for thethree* months ended* August 31, 2025,and its consolidated net income (loss) and comprehensive net income (loss) would have increased by approximately $257* for thethree months ended August 31, 2025.This unaudited pro forma financial information doesnot reflect the realization of any expected ongoing synergies relating to the integration of the Lyphe Acquisition.*** ***

Acquisition of HelloMD

On* July 10, 2026,Aphria inc., a wholly-owned subsidiary of the Company, acquired HelloMD Corporation (“HelloMD”), a digital healthcare and patient engagement platform (the “HelloMD Acquisition”). The purpose of the acquisition was driven by a strategic rationale tied to growth, vertical integration, and expansion in the Canadian medical cannabis market. In consideration for the HelloMD Acquisition, the Company paid a total purchase price of $720 (CAD $1,000) of cash consideration. 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.

Note8. Long-term investments

Long-term investments consisted of the following:

As of* August 31, 2026* and* May 31, 2026*, included within equity investment under measurement alternative (Level3) is an option to acquire a 68% membership interest in SH Acquisition for $1.00 upon U.S. federal cannabis legalization valued at $4,364 and $4,364, respectively. See Note24 (Financial risk management and financial instruments).

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Note9. 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* August 31, 2026*, the Company hasnot drawn on this 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* August 31, 2026*, a total of€7,490 ($8,688) 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.

On* July 24, 2026,American Beverage Crafts Group Inc. (“ABC Group”), a wholly-owned subsidiary of the Company, entered into a Sixth Amendment to Credit Agreement (the “Sixth Amendment”) with Bank of America, N.A., in its capacity as Administrative Agent, and certain other guarantors and lenders which are a party thereto. Specifically, the Sixth Amendment amends the Credit Agreement dated June 30, 2023and, among other things, reflects revisions to the Company's credit facilities, including a reduction in the revolving commitments from $25,000 to $15,000 and modifications to certain financial covenants. As of August 31, 2026*, the Company has drawn$nil on the revolving line of credit under the ABC Group Credit Agreement.

See Note26 (Subsequent events) for additional details after the period, with respect to the Seventh Amendment. As a result of this, the Company doesnot have the ability to draw on the revolving line of credit of $15,000 until covenant tests are once again tested.

Note10. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are comprised of:

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Note11. Long-term debt

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

On* July 24, 2026,ABC Group entered into the Sixth Amendment with Bank of America, and the lenders which are a party thereto. The Sixth Amendment amends the Credit Agreement and, among other things, reflects revisions to the Company’s credit facilities, including a reduction in the revolving commitments from $25,000 to $15,000 and modifications to certain of the financial covenants. The Sixth Amendment also acknowledges a voluntary prepayment of $10,000, which was made on May 29, 2026,*and includes various amendments, consents and other provisions relating to certain corporate and financing transactions.

See Note26 (Subsequent events) for additional details after the period, with respect to the Seventh Amendment.

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Note12. 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 approximately 37.66 shares per $1,000 principal amount of TLRY27* Notes, which represents a conversion price of approximately $26.55 per share. The conversion rate and conversion price is subject to adjustment upon the occurrence of certain events.

The TLRY27 Notes are now redeemable, in whole andnot in part, at Tilray’s option at 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, which threshold hasnot been met. 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, up 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 3,850,000 shares of the Company’s Common Stock to the Share Borrower (the “Borrowed Shares”). At the time of issuance, the Borrowed Shares were newly-issued shares, and are 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 3,850,000 shares of the Company’s Common Stock. The fair value of the Borrowed Shares have 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 months ended* August 31, 2026*, the Company exchanged an aggregate $24,000 of its TLRY27 Notes for cancellation, by issuing 5,229,861 shares of Common Stock and paying $218 in cash to settle 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 $6,358 reduction of additional paid-in capital in the Consolidated Statements of Stockholders’ Equity. Additionally, this repurchase resulted in a gain of $3,495, which was recorded in other non-operating (losses) gains, net as shown in Note23 (Non-operating income (expense)). Following consummation of the exchange, the number of outstanding Borrowed Shares of Common Stock was reduced by 535,652 shares, which were returned as Treasury Stock (as defined below). As of* August 31, 2026* and* May 31, 2026*, a total of 1,428,406 and 1,964,058 shares remained outstanding under the share lending arrangement, respectively. Prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on* December 2, 2025.*

During thethree months ended* August 31, 2026*, the Company recognized interest expense of $958** and accretion of amortized discount interest of $1,465. During thethree months ended August 31, 2025, the Company recognized interest expense of $1,367 and accretion of amortized discount interest of $1,976.

As of* August 31, 2026*, there was $64,000 principal outstanding compared to $88,000 principal outstanding as of* May 31, 2026* under the TLRY27 Notes.

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Note13. Warrant liability

As of* August 31, 2026* and* May 31, 2026*, the Company didnot have warrants outstanding. The Company previously issued an aggregate of 620,900 warrants, which were exercised between* September 5, 2025and September 15,2025 in accordance with their terms. In connection with the exercise of such warrants, Tilray received $2,367 of cash consideration and delivered 620,900 shares of the Company’s Common Stock to such holders. Prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on December 2, 2025.*

Note14. 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, and 10,000,000 shares of which are Preferred Stock (the “Preferred Stock”). As of* August 31, 2026*, the Company had issued and outstanding 144,936,074 shares of Common Stock,1,124,869 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 thethree months ended* August 31, 2026*, the Company had the following changes in shares of Common Stock:

During thethree months ended* August 31, 2026*, the Company granted 7,379,612** time-based Restricted Stock Units (“RSUs”) pursuant to the2018 Equity Incentive Plan (“EIP”). During the fiscal year ended May 31, 2026, the Company granted 4,562,669 time-based RSUs pursuant to the EIP.

During thethree months ended* August 31, 2026*, the Company grantednil performance-based RSUs. During the fiscal year ended* May 31, 2026*, the Company granted the following performance-based RSUs:

Beginning in fiscal year ended* May 31, 2024,the Company issued (i)756,615 performance‑based restricted stock units (the “Performance‑Based RSUs”) and (ii) additional performance‑based awards payable in cash or, at the discretion of the Company’s Compensation Committee, in shares of the Company’s common stock (the “Performance‑Based Elective Settlement Award,” and together with the Performance‑Based RSUs, the “Performance‑Based Awards”). The Performance‑Based Awards werenot* considered granted for accounting purposes at the time of issuance because the applicable performance conditions hadnot yet been established or approved. Accordingly,no compensation expense was recognized within the Consolidated Statements of Loss at that time. During the period from issuance through the fiscal year ended* May 31, 2026,*the number of outstanding Performance‑Based RSUs was reduced from 756,615 to 744,117 as a result of employee attrition, and the Performance‑Based Elective Settlement Award was also correspondingly reduced.

In* September 2025,the Company established and approved the relevant performance conditions for the Performance‑Based Awards and, as a result, the awards were considered granted for accounting purposes. Beginning in the quarter ended November 30, 2025,*the Company commenced recognition of stock‑based compensation expense based on the grant‑date fair value of the Performance‑Based Awards, which was recognized over the remaining requisite service period. Because the Performance‑Based Elective Settlement Award had a fixed monetary value and was settleable in a variable number of shares, it was classified as a liability within the Consolidated Statements of Financial Position. The Performance‑Based RSUs are classified as equity awards and are reflected within stockholders’ equity.

During thethree months ended* August 31, 2026,following the conclusion of the measurement period on May 31, 2026and the determination of the applicable achievement percentage, the Compensation Committee approved settlement of the Performance-Based Elective Settlement Award through a combination of cash and shares. Accordingly, the Company issued 1,387,047 shares of common stock during the period and settled the remaining obligation in cash subsequent to August 31, 2026.*

The Company’s total stock-based compensation expense incurred for thethree months ended* August 31, 2026* was $6,584 compared to $5,052 for thethree months ended* August 31,* 2025.

Prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on* December 2, 2025.*

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Note15. Accumulated other comprehensive income (loss)

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

Note16. Non-controlling interests

The following table provides a summary of certain balance sheet information as of* August 31, 2026*, before intercompany eliminations, relating to several entities in which the Company maintains a majority ownership with athird-party non-controlling interest, including Enroot (75% ownership), Aphria Diamond (51% ownership), and Colcanna S.A.S. (90% ownership):

The following table provides a summary of certain balance sheet information as of* May 31, 2026*, before intercompany eliminations, relating to the above-referenced majority-owned subsidiaries of the Company in which there was a non-controlling interest:

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The following table provides a summary of certain income statement information for thethree months ended* August 31, 2026*, before intercompany eliminations, relating to the above referenced majority-owned subsidiaries of the Company in which there was a non-controlling interest:

The following table provides a summary of certain income statement information for thethree months ended* August 31,* 2025, before intercompany eliminations, relating to the above referenced majority-owned subsidiaries of the Company in which there was a non-controlling interest:

Note17. 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 $1,725 for thethree months ended* August 31, 2026*, and an income tax recovery of $(2,285) for thethree months ended* August 31,* 2025. The income tax expense in the current period varies from the Federal statutory income tax rate and prior year 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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Note18. Commitments and contingencies

Purchase and other commitments

The Company has financial commitments that are classified as long-term debt, refer to Note11 (Long-term debt), as convertible notes, refer to Note12 (Convertible debentures payable), as material purchase commitments, which are inclusive of multi-period sponsorship rights, and as construction commitments as follows:

The amounts presented in the above table represent contractual commitments which are expected to be settled within the nexttwelve months from* August 31, 2026,with each subsequent column representing the succeedingtwelve* month period.

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 Financial Statements. These legal reserves* maybe increased or decreased to reflect any relevant developments on a quarterly basis. In circumstances where a loss isnot* probable or the amount of loss isnot estimable, we donot accrue legal reserves. While the outcome of legal proceedings carry an inherent degree of uncertainty, our management believes that it has established appropriate legal reserves based on the information currently available and available insurance coverage. 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, 2026*.

Summary of litigation accruals

As described in Note10 (Accounts payable and accrued liabilities), the total estimated litigation expense accrual included in accrued liabilities as of* August 31, 2026* and* May 31, 2026* was $11,923 and $11,931, respectively. During thethree months ended* August 31, 2026*, the accrual decreased as a result of foreign exchange effects. As described above, this accrual reflects reserves established for various ongoing litigation matters with probable losses that can be reasonably estimated.

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Note19. Net revenue

The Company reports Net revenue infour reporting segments: beverage, cannabis, distribution, and wellness. Net revenue for thethree months ended* August 31, 2026* andthree months ended* August 31,* 2025 were as follows:

Note20. 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 months ended* August 31, 2026* andthree months ended* August 31,* 2025 were as follows:

Note21. General and administrative expenses

General and administrative expenses for thethree months ended* August 31, 2026* andthree months ended* August 31,* 2025 were as follows:

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Note22. Restructuring charges

In connection with the integration of certain acquisitions and strategic transactions, the Company has incurred restructuring and exit costs in the amount of $2,447 for thethree months ended* August 31, 2026*, compared to $869 for thethree months ended* August 31,* 2025. All restructuring plans are approved at the executive level, and their associated expenses are recognized in the period in which the plan is committed or otherwise incurred.

Within the Beverage segment, restructuring activities primarily related to a business optimization plan designed to consolidate production, streamline and simplify operations, and improve the Beverage cost structure. Activities implemented under the plan included the closure of and the consolidation of volumes into certain brewery and related facilities. More specifically, in connection with our business optimization plan, we made decisions to cease production at our Terrapin facility in Athens, GA and our Hop Valley facility located in Eugene, OR, as well as executing an agreement to divest our Atwater business. Restructuring charges primarily consisted of employee termination severance and benefits, facility closure and exit costs, contract and other termination costs, costs associated with SKU rationalization activities, and other costs directly associated with the execution of the plan. As a result, during thethree months ended* August 31, 2026*, the Company incurred $2,258 of restructuring related expenses associated with these efforts. The Company expects these specific initiatives to be substantially completed by the end of fiscal2027.

Note23. Non-operating income (expense), net

Non-operating income (expense), net for thethree months ended* August 31, 2026* andthree months ended* August 31,* 2025 are as follows:

The other non-operating (losses) gains, net for thethree months ended* August 31, 2026*, were gains of $3,442, which were mainly comprised of a gain of $3,495 resulting from the exchange transaction of the TLRY27 Note, as described in Note12 (Convertible debentures payable).

The other non-operating (losses) gains, net for thethree months ended* August 31,* 2025, were gains of $543, which were mainly comprised of the gain of $495 resulting from the exchange transaction of the TLRY27 Note.

Note24. Financial risk management and financial instruments

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* August 31, 2026* and* May 31, 2026*, the Company had long-term debt of $1,613*** ***and $1,822, respectively, and the principal portion of convertible debentures payable of $64,000 and $88,000, 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 securities issued by U.S. Department of the Treasury with 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 as of* August 31, 2026* and* May 31, 2026*, that are measured at fair value on a recurring basis, 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 equity investments measured at fair value, digital assets, acquisition-related contingent consideration, and warrant liability.

During thethree months ended* August 31, 2026*, the Company didnot purchase any units of Bitcoin or other cryptocurrency. Digital assets recorded at fair value have quoted prices in active markets for identical assets and are classified as Level1. The following table presents the Company’s digital asset holdings as of* August 31, 2026*:

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.

As of* August 31, 2026* and* May 31, 2026*, included within Equity investment under measurement alternative (Level3) is an option to acquire a 68% membership interest in SH Acquisition for $1.00 upon U.S. federal cannabis legalization, which was valued at $4,364 and $4,364, respectively. The valuation continues to assume a70% probability of U.S. federal cannabis legalization, which is required for the option to become exercisable, as further described below.

A portion of the total consideration to be paid in connection with the Company’s acquisition of Montauk Brewing Company (“Montauk”) was contingent upon the achievement by Montauk of certain financial measures as of* December 31, 2025.*In the event that Montauk achieved either the pre-determined sales volume target or EBITDA target, then $15,000 of contingent consideration would be deemed earned and payable. If both the sales volume target and the EBITDA target were achieved, an additional $3,000 would be deemed earned and payable for a total contingent consideration payment of $18,000.

During thethree months ended* August 31, 2026,there wasno* change in the fair value of contingent consideration, as the applicable measurement period concluded during the prior fiscal year and as a resultno contingent consideration obligation was payable.

The fair value measurement was based on significant unobservable inputs related to projected operating performance and expected cash outflows and was therefore classified as a Level3 fair value measurement.

The balances of assets and liabilities categorized within Level3 of the fair value hierarchy, including equity investments accounted for under the measurement alternative, are reconciled as follows for the period ended* August 31, 2026*:

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During thethree months ended* August 31, 2025,the Company reassessed the estimated fair value of the contingent consideration liability as$nil, based on subsequent information regarding Montauk’s operating results and revised expectations for the remainder of the earn‑out period. As a result of lower‑than‑anticipated sales volumes during the peak selling periods of June,** Julyand August 2025,and the loss of certain national retail programs, management concluded that Montaukno* longer had a viable path to achieving the sales volume target or the EBITDA target within the earn‑out period. Accordingly, the Company applied a probability of achievement of 0% to the sales volume target and 0% to the remaining criteria. The resulting $15,000 change in fair value of the contingent consideration liability was recorded within the Consolidated Statements of Income (Loss) and Comprehensive Income (Loss) and contributed to the Company’s net income generated during the period ended* August 31, 2025,*despite historically reporting a loss.

The earn-out period concluded in fiscal2026, and neither financial measure was achieved. Accordingly, no further changes to the fair value of the contingent consideration liability were recognized during thethree-months ended* August 31, 2026or during the year ended May 31, 2026,*asno contingent consideration obligation was payable.

The balances of assets and liabilities categorized within Level3 of the fair value hierarchy, including equity investments accounted for under the measurement alternative, are reconciled as follows for the period ended* August 31,* 2025:

The unrealized gain (loss) on assets and liabilities categorized within Level3 of the fair value hierarchy are recognized in the Consolidated Statements of Income (Loss) and Comprehensive Income (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, assets held for sale, 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.

Capital and liquidity management

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.

As part of its capital and liquidity management strategy, the Company* may,when appropriate, engage with its lenders to amend the terms of its debt arrangements, obtain waivers, or otherwise modify financing terms. Separately, the Company continues to evaluate alternatives to address the maturity of its TLRY27* Notes on* June 15, 2027,*including pursuing opportunistic exchanges prior to maturity.

Note25. Segment reporting

Our Company’s Chief Operating Decision Maker (“CODM”) is the Chairman of the Board of Directors and Chief Executive Officer. The CODM uses segment gross profit for the purpose of resource allocation, assessment of segment performance against determined targets, and in deciding whether to implement cost saving targets. The Company operates infour segments.1) cannabis operations, which encompasses the production, distribution, sale, co-manufacturing and advisory services of both medical and adult-use cannabis,2) beverage operations, which encompasses the production, marketing and sale of beverage products,3) distribution operations, which encompasses the purchase and resale of pharmaceuticals products to customers, and4) wellness products, which encompasses wellness and better-for-you foods and beverages. This structure is in line with how our 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.

The following tables reconcile the Company’s segment gross profit to consolidated U.S. GAAP results:

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Segment costs are comprised of cost of goods sold, which include product costs, production-related salaries and an allocation of overhead costs.

The following table reconciles the total segment gross profit to the Company’s consolidated totals:

Channels of Cannabis revenue were as follows:

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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 months ended* August 31, 2026and2025*, there wereno major customers representing a material contribution to our quarterly revenues.

Note26. Subsequent Events

In* September**2026,* the Company completedthree private debt-for-equity Exchange Transactions with unrelated parties. Pursuant to the Exchange Transactions, the Company issued an aggregate of 2,841,650 shares of Common Stock in exchange for $12,000 aggregate principal amount of the TLRY27 Notes due* June 15, 2027.As a result, $52,000 of principal remains outstanding on the Company’s TLRY27* Notes as of the date of this filing on* October 8, 2026.*

In* September**2026,* the Company completed the sale of its 90% ownership interest in Colcanna S.A.S. en Liquidación. The Company received nominal cash consideration and the purchaser assumed all liabilities of the subsidiary.

On* October 7, 2026,ABC Group entered into a Seventh Amendment to Credit Agreement (the “Seventh Amendment”) with Bank of America, N.A., in its capacity as Administrative Agent, and certain other guarantors and lenders which are a party thereto. Specifically, the Seventh Amendment amends the Credit Agreement dated June 30, 2023,and among other things, provides that the financial covenants willnot* be tested for the fiscal quarter ended* August 31, 2026*and revises certain financial covenants for subsequent periods. The Seventh Amendment also limits borrowing availability under the revolving facility in future periods until the covenant tests are once again tested.