UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~November~~February 3028, ~~2025~~2026

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38594

TILRAY BRANDS, INC.

(Exact Name of Registrant as Specified in its Charter)

Delaware	82-4310622
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
265 Talbot Street West, Leamington, ON	N8H 5L4
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (844) 845-7291

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange on which registered

Common Stock, $0.0001 par value per share

TLRY

The Nasdaq Global Select Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. Yes ☒ No ☐

As of ~~January~~March 630, 2026, the registrant had 116,~~506~~548,~~916~~663 shares of Common Stock, $0.0001 par value per share issued and outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements (Unaudited)	1
	Consolidated Statements of Financial Position (Unaudited)	1
	Consolidated Statements of Loss and Comprehensive Loss (Unaudited)	2
	Consolidated Statements of Stockholders' Equity (Unaudited)	3
	Consolidated Statements of Cash Flows (Unaudited)	4
	Notes to Condensed Interim Consolidated Financial Statements (Unaudited)	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	45
Item 4.	Controls and Procedures	45
PART II.	OTHER INFORMATION	46
Item 1.	Legal Proceedings	46
Item 1A.	Risk Factors	47
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	48
Item 3.	Defaults Upon Senior Securities	48
Item 4.	Mine Safety Disclosures	48
Item 5.	Other Information	48
Item 6.	Exhibits	49
Signatures		51

Cautionary Note Regarding Forward-Looking Statements

This Quarterly Report on Form 10-Q for the fiscal quarter ended ~~November~~February 3028, ~~2025~~2026 (the “Form 10-Q”) contains forward-looking statements under Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. Such statements involve risks, uncertainties and assumptions. If the risks or uncertainties ever materialize or the assumptions prove incorrect, our results may differ materially from those expressed or implied by such forward-looking statements under the Canadian securities laws and within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that are intended to be subject to the “safe harbor” created by those sections and other applicable laws. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “project,” “will,” “would,” “seek,” or “should,” or the negative or plural of these words or similar expressions or variations are intended to identify such forward-looking statements. Forward-looking statements include, among other things, our beliefs or expectations relating to our future performance, results of operations and financial condition; our intentions regarding our cost savings initiatives and our expected benefits from those initiatives; our strategic initiatives, business strategy, supply chain, brand portfolio, product performance and expansion efforts; our ~~intentions~~expectations regarding ~~the~~revenue ~~use~~for certain of ~~net~~our ~~proceeds~~segments ~~from~~and ~~our~~trends ~~ATM~~for ~~Program~~gross margin; our intentions regarding our capital structure and TLRY 27 Notes; current or future macroeconomic trends; industry trends; or legislative or regulatory changes, including our statements regarding the anticipated impact of Tariffs on our costs or opportunities presented by such changes on our growth; our statements regarding the consolidation of the Canadian cannabis industry; our expectations for higher margin sales by redirecting our Canadian cannabis inventory to international markets: our expectations for our positioning and cannabis market share in Europe and other markets; future corporate acquisitions and strategic transactions; and our synergies, cash savings and efficiencies anticipated from the integration of our completed acquisitions and strategic transactions.

Risks and uncertainties that may cause actual results to differ materially from forward-looking statements include, but are not limited to, those identified in this Form 10-Q and other risks and matters described in our most recent Annual Report on Form 10-K for the fiscal year ended May 31, 2025 as well as our other filings made from time to time with the U.S. Securities and Exchange Commission and in our Canadian securities filings.

Forward looking statements are based on information available to us as of the date of this Form 10-Q and, while we believe that information provides a reasonable basis for these statements, these statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements. You should not rely upon forward-looking statements or forward-looking information as predictions of future events.

We undertake no obligation to update forward-looking statements to reflect actual results or changes in assumptions or circumstances, except as required by applicable law.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited).

TILRAY BRANDS, INC.

Consolidated Statements of Financial Position

(in thousands of United States dollars, unaudited)

	November 30,			May 31,
	February 28,			May 31,
	2025			2025
	2026			2025
Assets
Current assets
Cash and cash equivalents	$	~~246~~204,~~703~~620		$	221,666
Marketable securities		44,848			34,697
Restricted cash		44,885			—
Accounts receivable, net		109,071			121,489
Marketable securities		15,312			34,697
Inventory		283,198			270,882
Accounts receivable, net		118,372			121,489
Prepaids and other current assets		41,497			34,092
Inventory		292,303			270,882
Assets held for sale		4,000			5,800
Prepaids and other current assets		40,819			34,092
Total current assets		729,317			688,626
Assets held for sale		2,449			5,800
Capital assets		550,101			568,433
Total current assets		718,760			688,626
Operating lease, right-of-use assets		19,802			22,279
Capital assets		543,008			568,433
Digital assets		828			—
Operating lease, right-of-use assets		17,939			22,279
Intangible assets		21,735			21,423
Digital assets		614			—
Intangible assets		23,343			21,423
Goodwill		752,350			752,350
Long-term investments		137,~~393~~634			10,132
Other assets		11,~~073~~074			11,084
Total assets	$	2,~~098~~074,~~599~~722		$	2,074,327
Liabilities
Current liabilities
Bank indebtedness	$	8,~~567~~834		$	7,181
Accounts payable and accrued liabilities		~~226~~223,~~422~~996			235,322
Contingent consideration		—			15,000
Warrant liability		—			1,092
Current portion of lease liabilities		7,~~437~~259			6,941
Current portion of long-term debt		1617,~~889~~453			14,767
Total current liabilities		~~259~~257,~~315~~542			280,303
Long - term liabilities
Lease liabilities		6160,~~742~~282			64,925
Long-term debt		~~138~~134,~~739~~982			148,493
Convertible debentures payable		8688,~~255~~268			86,428
Deferred tax liabilities, net		57,~~622~~877			3,748
Other liabilities		~~417~~164			855
Total liabilities		~~552~~549,~~090~~115			584,752
Commitments and contingencies (refer to Note 19)
Stockholders' equity
Common stock ($0.0001 par value; 1,416,000,000 common shares authorized; 116,522,600 and 106,067,875 common shares issued and outstanding, respectively)1		116			106
Common stock ($0.0001 par value; 1,416,000,000 common shares authorized; 116,546,939 and 106,067,875 common shares issued and outstanding, respectively)1		116			106
Treasury Stock (321,391 and 200,422 treasury shares issued and outstanding, respectively)1		—			—
Preferred shares ($0.0001 par value; 10,000,000 preferred shares authorized; nil and nil preferred shares issued and outstanding, respectively)		—			—
Additional paid-in capital		6,~~511~~520,~~483~~501			6,401,657
Accumulated other comprehensive loss		(3944,~~293~~198	)		(43,063	)
Accumulated deficit		(4,~~892~~919,~~479~~051	)		(4,847,226	)
Total Tilray Brands, Inc. stockholders' equity		1,~~579~~557,~~827~~368			1,511,474
Non-controlling interests		(3331,~~318~~761	)		(21,899	)
Total stockholders' equity		1,~~546~~525,~~509~~607			1,489,575
Total liabilities and stockholders' equity	$	2,~~098~~074,~~599~~722		$	2,074,327

1Current and prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split (as defined below), which became effective on December 2, 2025. See Note 1 ~~for~~ ~~details~~(Basis of presentation and summary of significant accounting policies).

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

TILRAY BRANDS, INC.

Consolidated Statements of Loss and Comprehensive Loss

(in thousands of United States dollars, except for share and per share data, unaudited)

	Three months ended						~~Six~~Nine months ended
	November 30,			November 30,			November 30,			November 30,
	February 28,			February 28,			February 28,			February 28,
	2025			2024			2025			2024
	2026			2025			2026			2025
Net revenue	$	~~217~~206,~~507~~732		$	~~210~~185,~~950~~780		$	~~427~~633,~~008~~740		$	~~410~~596,~~994~~774
Cost of goods sold		~~160~~151,~~010~~778			~~149~~133,~~730~~769			~~312~~463,~~042~~820			~~290~~423,~~068~~837
Gross profit		5754,~~497~~954			6152,~~220~~011			~~114~~169,~~966~~920			~~120~~172,~~926~~937
Operating expenses:
General and administrative		5150,~~175~~228			4539,~~997~~246			92142,~~228~~456			90129,~~110~~356
Selling		1110,~~781~~617			1613,~~162~~905			2435,~~704~~321			2741,~~852~~757
Amortization		45,~~358~~106			2223,~~927~~182			813,~~287~~393			4467,~~731~~913
Marketing and promotion		98,~~981~~692			96,~~720~~793			2028,~~136~~828			2128,~~286~~079
Research and development		7862			6085			~~119~~181			~~165~~250
Change in fair value of contingent consideration		—			—			(15,000	)		—
Litigation costs, net of recoveries		869			901			1,876			2,496
Impairment of intangible assets and goodwill		—			699,235			—			699,235
Restructuring costs		965			6,869			1,834			11,116
Other than temporary change in fair value of convertible notes receivable		—			20,000			—			20,000
Transaction costs (income), net		569			802			969			1,958
Litigation costs, net of recoveries		621			2,758			2,497			5,254
Total operating expenses		79,776			103,438			135,153			199,714
Restructuring costs		4,087			6,133			5,921			17,249
Operating loss		(22,279	)		(42,218	)		(20,187	)		(78,788	)
Transaction costs (income), net		1,927			605			2,896			2,563
Interest expense, net		(5,374	)		(7,766	)		(12,070	)		(17,608	)
Total operating expenses		81,340			811,942			216,493			1,011,656
Non-operating income (expense), net		(12,310	)		(33,255	)		(8,478	)		(20,609	)
Operating loss		(26,386	)		(759,931	)		(46,573	)		(838,719	)
Loss before income taxes		(39,963	)		(83,239	)		(40,735	)		(117,005	)
Interest expense, net		(4,965	)		(8,378	)		(17,035	)		(25,986	)
Income tax expense (recovery), net		3,546			2,036			1,261			2,922
Non-operating income (expense), net		8,092			(24,022	)		(386	)		(44,631	)
Net loss	$	(43,509	)	$	(85,275	)	$	(41,996	)	$	(119,927	)
Loss before income taxes		(23,259	)		(792,331	)		(63,994	)		(909,336	)
Income tax expense (recovery), net		1,974			1,203			3,235			4,125
Net loss	$	(25,233	)	$	(793,534	)	$	(67,229	)	$	(913,461	)
Total net income (loss) attributable to:
Stockholders of Tilray Brands, Inc.		(4426,~~931~~572	)		(85789,~~342~~436	)		(4571,~~253~~825	)		(~~124~~913,~~507~~943	)
Non-controlling interests		1,~~422~~339			67(4,098	)		34,~~257~~596			~~4,580~~482
Other comprehensive gain (loss), net of tax
Foreign currency translation gain (loss)		(4,~~464~~687	)		(85,~~966~~389	)		~~4,276~~(411	)		(410,~~806~~195	)
Comprehensive loss	$	(3929,~~045~~920	)	$	(94798,~~241~~923	)	$	(3767,~~720~~640	)	$	(~~124~~923,~~733~~656	)
Total comprehensive income (loss) attributable to:
Stockholders of Tilray Brands, Inc.		(4031,~~994~~477	)		(93794,~~422~~414	)		(4172,~~483~~960	)		(~~128~~923,~~965~~379	)
Non-controlling interests		1,~~949~~557			(~~819~~4,509	)		35,~~763~~320			~~4,232~~(277	)
Weighted average number of common shares - basic1		~~110~~112,~~343~~675,~~368~~734			8690,~~497~~834,~~456~~279			~~108~~109,~~173~~657,~~486~~744			8386,~~740~~079,~~894~~372
Weighted average number of common shares - diluted1		~~110~~112,~~343~~675,~~368~~734			8690,~~497~~834,~~456~~279			~~108~~109,~~173~~657,~~486~~744			8386,~~740~~079,~~894~~372
Net loss per share - basic1	$	(0.4124	)	$	(08.9969	)	$	(0.4265	)	$	(110.4962	)
Net loss per share - diluted1	$	(0.4124	)	$	(08.9969	)	$	(0.4265	)	$	(110.4962	)

1Current and prior year share and amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on December 2, 2025. See Note 1 ~~for~~ ~~details~~(Basis of presentation and summary of significant accounting policies).

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

TILRAY BRANDS, INC.

Consolidated Statements of Stockholders’ Equity

(in thousands of United States dollars, except for share data, unaudited)

														Accumulated
	Number of					Number of					Additional			other						Non-
	common			Common		treasury			Treasury		paid-in			comprehensive			Accumulated			controlling
	shares1			Stock		shares1			stock		capital			loss			Deficit			interests			Total
Balance at May 31, 2024		83,192,537		$	83		—		$	—	$	6,146,810		$	(43,499	)	$	(2,660,488	)	$	272		$	3,443,178
Share issuance - At-the-Market (“ATM”) program		3,669,331			4		—			—		66,468			—			—			—			66,472
Share issuance - RSUs exercised		682,314			1		—			—		(1	)		—			—			—			—
Share issuance - options exercised		301			—		—			—		—			—			—			—			—
Shares effectively repurchased for employee withholding tax		—			—		—			—		(2,661	)		—			—			—			(2,661	)
Stock-based compensation		—			—		—			—		6,917			—			—			—			6,917
Comprehensive income (loss) for the period		—			—		—			—		—			3,622			(39,165	)		5,051			(30,492	)
Balance at August 31, 2024		87,544,483		$	88		—		$	—	$	6,217,533		$	(39,877	)	$	(2,699,653	)	$	5,323		$	3,483,414
Share issuance - At-the-Market (“ATM”) program		3,051,756			3		—			—		45,041			—			—			—			45,044
Share issuance - Repurchase of TLRY 27 convertible note		1,003,464			1		(368,261	)		—		17,084			—			—			—			17,085
Share issuance - Settlement of equity component of TLRY 27 convertible note		—			—		—			—		(4,931	)		—			—			—			(4,931	)
Share issuance - Double Diamond Holdings dividend settlement		1,321,759			1		—			—		23,823			—			—			(23,824	)		—
Share issuance - RSUs exercised		3,598			—		—			—		—			—			—			—			—
Share issuance - options exercised		735			—		—			—		—			—			—			—			—
Stock-based compensation		—			—		—			—		7,237			—			—			—			7,237
Comprehensive loss for the period		—			—		—			—		—			(8,080	)		(85,342	)		(819	)		(94,241	)
Balance at November 30, 2024		92,925,795			93		(368,261	)		—		6,305,787			(47,957	)		(2,784,995	)		(19,320	)		3,453,608
Share issuance - At-the-Market (“ATM”) program		2,639,994			3		—			—		28,219			—			—			—			28,222
Share issuance - Repurchase of TLRY 27 convertible note		2,713,677			3		(593,681	)		—		26,440			—			—			—			26,443
Share issuance - Settlement of equity component of TLRY 27 convertible note		—			—		—			—		(7,442	)		—			—			—			(7,442	)
Share issuance - RSUs exercised		57,796			—		—			—		—			—			—			—			—
Stock-based compensation		—			—		—			—		4,035			—			—			—			4,035
Disposal of SH Acquisition non-controlling interests		—			—		—			—		—			—			—			(3,840	)		(3,840	)
Comprehensive loss for the period		—			—		—			—		—			(4,978	)		(789,436	)		(4,509	)		(798,923	)
Balance at February 28, 2025		98,337,262			99		(961,942	)		—		6,357,039			(52,935	)		(3,574,431	)		(27,669	)		2,702,103
Balance at May 31, 2025		106,067,875		$	106		(200,422	)	$	—	$	6,401,657		$	(43,063	)	$	(4,847,226	)	$	(21,899	)	$	1,489,575
Share issuance - At-the-Market (“ATM”) program		3,444,380			3		—			—		22,488			—			—			—			22,491
Share issuance - Repurchase of TLRY 27 convertible note		1,259,182			1		(120,969	)		—		4,799			—			—			—			4,800
Share issuance - Settlement of equity component of TLRY 27 convertible note		—			—		—			—		(1,158	)		—			—			—			(1,158	)
Share issuance - RSUs exercised		1,057,680			1		—			—		(1	)		—			—			—			—
Shares effectively repurchased for employee withholding tax		—			—		—			—		(1,427	)		—			—			—			(1,427	)
Stock-based compensation		—			—		—			—		5,052			—			—			—			5,052
Comprehensive income (loss) for the period		—			—		—			—		—			(167	)		(322	)		1,814			1,325
Balance at August 31, 2025		111,829,117		$	111		(321,391	)	$	—	$	6,431,410		$	(43,230	)	$	(4,847,548	)	$	(20,085	)	$	1,520,658
Share issuance - At-the-Market (“ATM”) program		3,332,844			3		—			—		50,562			—			—			—			50,565
Share issuance - RSUs exercised, net of cancellations		(121,968	)		—		—			—		—			—			—			—			—
Share issuance - Warrant exercised		620,900			1		—			—		6,954			—			—			—			6,955
Share issuance - Double Diamond Holdings dividend settlement		861,707			1		—			—		14,821			—			—			(15,182	)		(360	)
Stock-based compensation		—			—		—			—		7,736			—			—			—			7,736
Comprehensive income (loss) for the period		—			—		—			—		—			3,937			(44,931	)		1,949			(39,045	)
Balance at November 30, 2025		116,522,600		$	116		(321,391	)	$	—	$	6,511,483		$	(39,293	)	$	(4,892,479	)	$	(33,318	)	$	1,546,509
Fractional shares cancelled pursuant to Reverse Stock Split		(20,652	)		—		—			—		(159	)		—			—			—			(159	)
Share issuance - RSUs exercised, net of cancellations		44,991			—		—			—		—			—			—			—			—
Stock-based compensation		—			—		—			—		9,177			—			—			—			9,177
Comprehensive income (loss) for the period		—			—		—			—		—			(4,905	)		(26,572	)		1,557			(29,920	)
Balance at February 28, 2026		116,546,939		$	116		(321,391	)	$	—	$	6,520,501		$	(44,198	)	$	(4,919,051	)	$	(31,761	)	$	1,525,607

1Current and prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on December 2, 2025. See Note 1 ~~for~~ ~~details~~(Basis of presentation and summary of significant accounting policies).

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

TILRAY BRANDS, INC.

Consolidated Statements of Cash Flows

(in thousands of United States dollars, unaudited)

	For the six months ended
	For the nine months ended
	November 30,			November 30,
	February 28,			February 28,
	2025			2024
	2026			2025
Cash provided by (used in) operating activities:
Net loss	$	(4167,~~996~~229	)	$	(~~119~~913,~~927~~461	)
Adjustments for:
Deferred income tax (recovery) expense, net		13,~~261~~235			12,~~529~~686
Unrealized foreign exchange gain		4,899			9,627
Unrealized foreign exchange (gain) loss		(5,886	)		30,725
Amortization		3148,~~519~~260			6599,~~864~~410
Accretion of convertible debt discount		35,~~964~~977			58,~~985~~751
Unrealized loss on digital assets		172			—
Impairments		—			699,235
Other non-cash items		1,767			3,281
Other than temporary change in fair value of convertible notes receivable		—			20,000
Stock-based compensation		17,335			14,154
Unrealized loss on digital assets		386			—
Gain on long-term investments		306			66
Other non-cash items		2,402			1,503
Loss (gain) on derivative instruments		3,495			(1,558	)
Stock-based compensation		31,060			18,189
Loss on long-term investments		4,449			5,540
Loss (gain) on derivative instruments		3,495			(2,896	)
Change in fair value of contingent consideration		(15,000	)		—
Change in non-cash working capital:
Accounts receivable		123,~~418~~117			~~(9,051~~321	)
Prepaids and other current assets		(73,~~394~~717	)		(138,~~046~~258	)
Inventory		(1221,~~316~~421	)		(85,~~127~~577	)
Accounts payable and accrued liabilities		(1020,~~308~~948	)		(2437,~~828~~960	)
Net cash used in operating activities		(931,~~878~~820	)		(7681,~~031~~792	)
Cash provided by (used in) investing activities:
Investment in capital and intangible assets		(1922,~~219~~838	)		(1226,~~172~~586	)
Proceeds from disposal of capital and intangible assets		~~427~~1,798			~~631~~833
Investment in digital assets		(1,000	)		—
Purchase of marketable securities, net		(10,151	)		(30,369	)
Sale (purchase) of marketable securities, net		19,385			(16,276	)
Investment in long-term investments		(3,595	)		—
Proceeds from long-term investments		1,629			—
Business acquisitions, net of cash acquired		—			(18,210	)
Net cash used in investing activities		(334,~~538~~621	)		(60,~~120~~239	)
Cash provided by (used in) financing activities:
Share capital issued, net of cash issuance costs		73,058			~~111~~139,~~517~~738
Cash paid in lieu fractional shares		(159	)		—
Proceeds from warrants exercised		2,367			—
Repayment of long-term debt		(6,872	)		(10,388	)
Proceeds from long-term debt		—			3,450
Repayment of long-term debt		(11,108	)		(16,115	)
Repayment of convertible debt		—			(330	)
Repayment of lease liabilities		(12,991	)		(12,~~724~~586	)
Net decrease in bank indebtedness		1,~~386~~653			(~~282~~7,293	)
Net cash provided by financing activities		6762,~~948~~820			98116,~~793~~864
Effect of foreign exchange on cash and cash equivalents		~~505~~1,460			(13,~~284~~217	)
Net increase (decrease) in cash and cash equivalents		2527,~~037~~839			(3828,~~642~~384	)
Cash and cash equivalents, beginning of period		221,666			228,340
Cash and cash equivalents, end of period	$	246,703		$	189,698
Cash and cash equivalents and restricted cash, end of period	$	249,505		$	199,956

Within the consolidated statements of cash flows, cash and cash equivalents includes $44,885 of restricted cash as of February 28, 2026, and $nil as of February 28, 2025.

The accompanying notes are an integral part of these condensed interim consolidated financial statements.

TILRAY BRANDS, INC.

Notes to Consolidated Financial Statements

Note 1. 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 ~~November~~February 3028, ~~2025~~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 do not 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 Form 10-K for the fiscal year ended May 31, 2025 (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 are not 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 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, 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. 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.

~~Reverse~~Restricted ~~Stock Split~~cash

We classify cash that is legally or contractually restricted as to withdrawal or usage as restricted cash. As of February 28, 2026, the Company reported $44,885 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 Note 26 (Subsequent Events).

Reverse stock split

Effective December 2, 2025, the Company implemented a reverse stock split of its outstanding shares of Common Stock, at a ratio of one-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 contained in the condensed interim consolidated 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 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 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 TLRY 27 Notes, see Note 12 (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 are not considered in periods in which a net loss attributable to Tilray shareholders is reported, as the inclusion of the common share equivalents would be anti-dilutive. For the three months ended ~~November~~February 3028, ~~2025~~2026 and ~~November~~February 3028, ~~2024~~2025, the dilutive potential common share equivalents outstanding consisted of the following: 7,~~734~~626,~~265.~~712 and 2,~~336~~189,~~535~~612 common shares from RSUs, 303,~~203~~199 and ~~306~~303,~~032~~256 common shares from share options, nil and 620,900 common shares for warrants and 3,766,478 and 54,~~875~~873,~~706~~823 common shares for convertible debentures, respectively. Current and prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on December 2, 2025.

Digital Assets

In December 2023, FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. ASU 2023-08 requires certain crypto assets to be measured at fair value separately on the balance sheet with gains and losses from changes in the fair value reported as unrealized gains or losses in the consolidated statement of income (loss) and comprehensive income (loss) each reporting period. ASU 2023-08 also enhances the other intangible asset disclosure requirements by requiring the name, cost basis, fair value, and number of units for each significant crypto asset holding. In conjunction with the acquisition of digital assets during the fiscal quarter ended August 31, 2025, the Company adopted and applied ASU-2023-08 henceforth.

The Company's digital assets are initially recorded at cost, and are subsequently measured at fair value as of each reporting period. The Company determines the fair value of its digital assets in accordance with ASC 820, Fair Value Measurement, based on quoted prices in its principal market for Bitcoin (Level 1). Changes in fair value are recognized as incurred in the Company's consolidated statement of income (loss) and comprehensive income (loss), as “Unrealized (gain) loss on digital assets,” within non-operating (income) and expenses, net.

New accounting pronouncements not yet adopted

In August 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-05, Business Combination - Joint Venture Formations (Subtopic 805-60) Recognition and Initial Measurement (“ASU 2023-05”), which is intended to address the accounting for contributions made to a joint venture. ASU 2023-05 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 ASU 2023-06, 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 has not 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 will not become effective for any entity. The Company is currently evaluating the effect of adopting this ASU.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740) 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. ASU 2023-09 is effective for the Company beginning with its fiscal year ended May 31, 2026 and will be disclosed in the Financial Statements reported in our Annual Report on Form 10-K filed with the SEC for such period. The Company is in the process of evaluating the impact of the financial statement disclosure requirement.

In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which requires disaggregated disclosure of income statement expenses for public business entities. ASU 2024-03 is effective for the Company beginning fiscal year ended May 31, 2028 and will be disclosed in the Annual Report on Form 10-K for such period. The Company is currently evaluating the effect of adopting this ASU.

New accounting pronouncements recently adopted

In November 2024, the FASB issued ASU 2024-04, Debt with Conversion and Other Options (Subtopic 470-20): 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. The Company adopted ASU 2024-04 beginning June 1, 2025, however, it did not have any impact on our unaudited interim consolidated financial statements.

Digital Assets

In December 2023, FASB issued ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. ASU 2023-08 requires certain crypto assets to be measured at fair value separately on the balance sheet with gains and losses from changes in the fair value reported as unrealized gains or losses in the consolidated statement of income (loss) and comprehensive income (loss) each reporting period. ASU 2023-08 also enhances the other intangible asset disclosure requirements by requiring the name, cost basis, fair value, and number of units for each significant crypto asset holding. In conjunction with the acquisition of digital assets during the fiscal quarter ended August 31, 2025, the Company adopted and applied ASU-2023-08 henceforth.

The Company's digital assets are initially recorded at cost, and are subsequently measured at fair value as of each reporting period. The Company determines the fair value of its digital assets in accordance with ASC 820, Fair Value Measurement, based on quoted prices in its principal market for Bitcoin (Level 1). Changes in fair value are recognized as incurred in the Company's consolidated statement of income (loss) and comprehensive income (loss), as “Unrealized (gain) loss on digital assets,” within non-operating (income) and expenses, net.

Note 2. Inventory

Inventory consisted of the following:

	November 30,		May 31,
	February 28,		May 31,
	2025		2025
	2026		2025
Beverage inventory	$	67,~~363~~424	$	63,965
Cannabis plants		2930,~~117~~872		24,045
Dried cannabis		~~106~~110,~~114~~315		103,507
Cannabis derivatives		34,~~798~~227		7,877
Cannabis vapes		1,~~639~~747		1,860
Packaging and other inventory items		13,~~532~~746		15,366
Distribution inventory		4849,~~104~~901		38,735
Wellness inventory		1314,~~531~~071		15,527
Total	$	~~283~~292,~~198~~303	$	270,882

Note 3. Capital assets

Capital assets consisted of the following:

	November 30,			May 31,
	February 28,			May 31,
	2025			2025
	2026			2025
Land	$	45,~~188~~535		$	44,529
Production facilities		~~415~~422,~~110~~586			407,650
Equipment		278,~~205~~873			280,585
Leasehold improvements		2221,~~060~~459			20,415
Finance lease, right-of-use assets		3938,~~406~~792			40,308
Construction in progress		12,~~469~~187			11,241
	$	~~812~~819,~~438~~432		$	804,728
Less: accumulated amortization		(~~262~~276,~~337~~424	)		(236,295	)
Total	$	~~550~~543,~~101~~008		$	568,433

Assets held for sale consisted of the following:

	November 30,		May 31,
	February 28,		May 31,
	2025		2025
	2026		2025
Production facilities	$	~~4,000~~—	$	5,800
Total	$	4,000	$	5,800
Equipment		979		—
Leasehold improvements		493		—
Operating lease, right-of-use assets		977		—
Total	$	2,449	$	5,800

AsDuring ~~of November~~the 30three months ended February 28, ~~2025~~2026, the Company classified the ~~Fort~~assets ~~Collins,~~of COAtwater ~~partially~~Brewing, ~~vacant~~with ~~warehouse~~a ~~facility~~carrying value of $2,449 from its ~~Cannabis~~ Beverage reporting ~~segment~~unit, as assets held for sale. These ~~During~~assets ~~the~~were acquired ~~three~~on ~~months~~September 1, 2024 ~~ended November~~as ~~30,~~part ~~2025,~~of the ~~Company~~transaction ~~recorded~~referred ato ~~reduction~~as ~~in fair~~“Craft ~~value~~Acquisition II.” Following management’s assessment of $1facility utilizations,~~800~~ it was determined that such assets would be held for sale. Assets held for sale are measured at the ~~Fort~~lower ~~Collins,~~of COcarrying ~~asset~~amount ~~group~~and the fair value less costs to sell and are no longer depreciated. Changes in the carrying amount are recorded in the consolidated statement of net loss and comprehensive loss. ~~Subsequent~~During to the ~~period~~three months ended ~~November~~February 3028, ~~2025~~2026, the Company also completed the sale of the Fort Collins asset group. The loss on the disposition of assets held for sale are recorded in the consolidated statement of loss.

Note 4. Leases

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

		November 30,		May 31,
		February 28,		May 31,
	Classification on Balance Sheet	~~2025~~2026		2025
Assets
Finance lease, right-of-use assets	Capital assets	$	3938,~~406~~792	$	40,308
Operating lease, right-of-use assets	Operating lease, right-of-use assets		1917,~~802~~939		22,279
Total right-of-use assets		$	5956,~~208~~731	$	62,587
Liabilities
Current:
Current portion of finance lease liabilities	Current portion of lease liabilities	$	1,~~628~~662	$	1,560
Current portion of operating lease liabilities	Current portion of lease liabilities		5,~~809~~597		5,381
Non-current:
Finance lease liabilities	Lease liabilities		43,~~597~~226		44,295
Operating lease liabilities	Lease liabilities		1817,~~145~~056		20,630
Total lease liabilities		$	6967,~~179~~541	$	71,866

~~The~~Included ~~following~~in ~~table~~total ~~presents~~lease ~~the~~liabilities ~~future~~is ~~undiscounted~~$985 ~~payments~~related ~~associated~~to ~~with~~disposal ~~lease~~groups ~~liabilities~~classified as ~~of November~~held ~~30,~~for ~~2025:~~sale. See Note 3 (Capital Assets).

	Operating			Finance
	leases			leases
2026 (remaining six months)	$	3,711		$	2,260
2027		6,938			4,521
2028		5,920			4,521
2029		2,939			4,373
Thereafter		11,004			66,816
Total minimum lease payments	$	30,512		$	82,491
Imputed interest		(6,558	)		(37,266	)
Obligations recognized	$	23,954		$	45,225

The following table presents the future undiscounted payments associated with lease liabilities as of February 28, 2026:

	*Operating*			*Finance*
	*leases*			*leases*
2026 (remaining three months)	$	1,943		$	1,131
2027		7,003			4,523
2028		5,923			4,523
2029		2,935			4,375
Thereafter		10,802			66,939
Total minimum lease payments	$	28,606		$	81,491
Imputed interest		(5,953	)		(36,603	)
Obligations recognized	$	22,653		$	44,888

Note 5. Intangible Assets

Intangible assets consisted of the following items:

	Customer relationships & distribution channel			Licenses, permits & applications			Intellectual property, trademarks, knowhow & brands			~~November~~February 3028,
										2025
										2026
Cost	$	2,~~376~~409		$	1518,~~101~~432		$	1516,~~466~~784		$	3237,~~943~~625
Accumulated amortization		(~~100~~161	)		(79,~~245~~113	)		(35,~~863~~008	)		(1114,~~208~~282	)
Total	$	2,~~276~~248		$	79,~~856~~319		$	11,~~603~~776		$	2123,~~735~~343

As of ~~November~~February 3028, ~~2025~~2026, the Company also has 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.

	Customer relationships & distribution channel			Licenses, permits & applications			Non-compete agreements			Intellectual property, trademarks, knowhow & brands			May 31,
													2025
Cost	$	610,240		$	387,238		$	12,449		$	618,514		$	1,628,441
Accumulated amortization		(166,032	)		(9,693	)		(12,449	)		(155,084	)		(343,258	)
Accumulated impairment losses		(444,208	)		(367,022	)		—			(452,530	)		(1,263,760	)
Total	$	—		$	10,523		$	—		$	10,900		$	21,423

Licenses, permits & applications are predominantly comprised of multi-period sponsorship rights.

Expected future amortization expense for intangible assets as of ~~November~~February 3028, ~~2025~~2026 is as follows:

	Amortization
2026 (remaining six months)	$	3,238
2026 (remaining three months)	$	1,810
2027		67,~~476~~240
2028		46,~~512~~074
2029		2,~~548~~580
2030		2,~~548~~580
Thereafter		23,~~413~~059
Total	$	2123,~~735~~343

Note 6. Goodwill

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

	November 30,
	February 28,
	2025
	2026
Cannabis Goodwill	$	2,640,669
Accumulated impairment losses		(1,888,319	)
Total	$	752,350

	Reporting Unit												May 31,
	Beverage			Cannabis			Wellness			Distribution			2025
Goodwill	$	120,802		$	2,640,669		$	77,470		$	4,458		$	2,843,399
Accumulated impairment losses		(120,802	)		(1,~~888~~897,~~319~~431	)		(68,186	)		(4,235	)		(2,090,654	)
Effect of foreign exchange		—			—9,112			(9,284	)		(223	)		(395	)
Total	$	—		$	752,350		$	—		$	—		$	752,350

During the fiscal quarter ended February 28, 2026, the Company assessed for indicators of impairment and concluded that there were no indicators and accordingly, no further impairment testing was required and no impairment charges were recognized during the period.

In the prior year, during the fiscal quarter ended February 28, 2025, 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 was more likely than not, that the fair value of our reporting units were less than their carrying amounts. 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 the three and nine months ended February 28, 2025. The non-cash charge had no 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 performed during the three and nine months ended February 28, 2025, 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 next 5 years. A 1% increase in the discount rate would result in an additional $285,000 in impairment, a 1% decrease in the terminal growth rate would result in an additional $210,000 in impairment, a 5% decrease in the average growth rate would result in an additional $170,000 in impairment, a 5% decrease in the probability of EU cannabis legalization would result in an additional $80,000 in impairment and a 5% 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 performed during the three and nine months ended February 28, 2025, 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. A 1% increase in the discount rate would result in an additional $70,000 in impairment, a 1% decrease in the terminal growth rate would result in an additional $50,000 in impairment and a 1% decrease in the average growth rate would result in an additional $40,000 in impairment.

In the Company’s wellness goodwill assessment performed during the three and nine months ended February 28, 2025, 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. A 1% increase in the discount rate would result in an additional $5,000 in impairment, a 1% decrease in the terminal growth rate would result in an additional $3,000 in impairment and a 1% decrease in the average growth rate would result in an additional $2,000 in impairment.

In the Company’s distribution goodwill assessment performed during the three and nine months ended February 28, 2025, the Company recorded $4,235 of impairments which brought the remaining distribution goodwill balance to $nil.

Note 7. Business acquisitions

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 $22,979 in cash, which was subject to certain customary post-closing working capital adjustments.

The table below summarizes the fair value of the assets acquired and the liabilities assumed for the Craft Acquisition II at the effective acquisition date as follows:

	*Amount*
Consideration
Cash consideration	$	22,979
Net assets acquired
Current assets
Cash and cash equivalents		4,869
Accounts receivable		1,993
Inventory		6,844
Prepaids and other current assets		185
Long-term assets
Capital assets		20,916
Finance lease, right-of-use assets		1,869
Operating lease, right-of-use assets		1,884
Total assets		38,560
Current liabilities
Accounts payable and accrued liabilities		11,828
Current portion of finance lease liabilities		354
Current portion of operating lease liabilities		564
Long - term liabilities
Finance lease liabilities		1,515
Operating lease liabilities		1,320
Total liabilities		15,581
Total net assets acquired		22,979

In the event that the Craft Acquisition II had occurred on June 1, 2024, the Company would have had, on an unaudited proforma basis, additional net revenue of approximately $nil and $nil for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and approximately $nil and $13,700 for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~2025, respectively, and its consolidated net loss and comprehensive net loss would have increased by approximately $nil and $nil for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and approximately $nil and $4,000 for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~2025, respectively. This unaudited pro forma financial information does not reflect the realization of any expected ongoing synergies relating to the integration of the Craft Acquisition II.

Note 8. Long term investments

Long term investments consisted of the following:

	November 30,		May 31,
	February 28,		May 31,
	2025		2025
	2026		2025
Equity investments measured at fair value	$	53,~~233~~270	$	1,972
Equity investments under measurement alternative		84,~~160~~364		8,160
Total	$	137,~~393~~634	$	10,132

As of ~~November~~February 3028, ~~2025~~2026 and May 31, 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 $4,364 and $8,160 respectively. See Note 24 (Financial risk management and financial instruments).

Note 9. Bank indebtedness

Aphria Inc., a subsidiary of the Company, has an operating line of credit in the amount of C$1,000, which bears interest at the lender’s prime rate plus 75 basis points. As of ~~November~~February 3028, ~~2025~~2026, the Company has not drawn on the line of credit. The operating line of credit is secured by a security interest on certain real property located at 265 Talbot St. West, Leamington, Ontario.

CC Pharma GmbH, a subsidiary of the Company, has two 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 ~~November~~February 3028, ~~2025~~2026, a total of €7,~~386~~487 ($8,~~567~~834) 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 25, 2025, the Company’s wholly-owned subsidiary, American Beverage Crafts Group Inc. (“ABC Group”), formerly known as Four Twenty Corporation, finalized its fifth amendment (the “Amendment”) to that certain Credit Agreement dated as of June 30, 2023 (the “ABC Group Credit Agreement”) by and among the Borrower, Bank of America, N.A., in its capacity as Administrative Agent, and certain other guarantors and lenders party thereto. Specifically, the Amendment amended and restated the ABC Group Credit Agreement to provide for the contribution of the Manitoba Harvest entities’ equity to the Borrower as additional collateral. Additionally, the Amendment added financial covenants for (i) minimum consolidated trailing-twelve-months EBITDA for each of the four quarters, beginning May 31, 2025 and (ii) minimum liquidity. ABC Group has a revolving credit facility of $25,000, which bears interest at SOFR plus an applicable margin. As of ~~November~~ February 3028, ~~2025~~2026, the Company has drawn $nil on the revolving line of credit under the ABC Group Credit Agreement.

Note 10. Accounts payable and accrued liabilities

Accounts payable and accrued liabilities are comprised of:

	November 30,		May 31,
	February 28,		May 31,
	2025		2025
	2026		2025
Trade payables	$	~~114~~115,~~496~~333	$	107,348
Accrued liabilities		8270,~~519~~342		103,260
Litigation accruals		1211,~~013~~931		12,431
Accrued payroll and employment related taxes		512,~~151~~702		1,436
Income taxes payable		~~1,905~~—		58
Accrued interest		32,~~873~~444		4,193
Sales taxes payable		611,~~465~~244		6,596
Total	$	~~226~~223,~~422~~996	$	235,322

Note 11. Long-term debt

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

	November 30,			May 31,
	February 28,			May 31,
	2025			2025
	2026			2025
Term loan - C$53,000 - Canadian prime plus an applicable margin, 3-year term, with a 10-year amortization, repayable in equal quarterly payments due in February 2028	$	3635,~~720~~770		$	38,690
Term loan - C$25,000 - Canadian prime plus 1.00%, compounded monthly, 5-year term, with a 15-year amortization, repayable in equal monthly installments of C$181 including interest, due in July 2033		10,~~788~~647			11,501
Term loan - C$25,000 - Canadian prime plus 1.00%, compounded monthly, 5-year term, with a 15-year amortization, repayable in equal monthly installments of C$196 including interest, due in July 2033		8,~~772~~660			9,354
Term loan - C$1,250 - Canadian prime plus 1.50%, 5-year term, with a 10-year amortization, repayable in equal monthly installments of C$12 including interest, due in August 2026		9057			157
Mortgage payable - C$3,750 - Canadian prime plus 1.50%, 5-year term, with a 20-year amortization, repayable in equal monthly installments of C$23 including interest, due in August 2026		1,~~930~~924			2,020
Term loan ‐ €3,500 ‐ at 4.59%, 5‐year term, repayable in monthly installments of €52 plus interest, due in August 2028		2,~~216~~047			2,546
Mortgage payable - $22,635 - EURIBOR rate plus 1.5%, 10-year term, repayable in monthly installments of $57 to $69, due in October 2030		1918,~~047~~858			19,418
Term loan - $90,000 - SOFR plus an applicable margin, 5-year term, repayable in quarterly installments of $875 to $2,250 due in June 2028		7775,~~063~~375			80,438
Carrying amount of long-term debt		~~156~~153,~~626~~338			164,124
Unamortized financing fees		(~~998~~903	)		(864	)
Net carrying amount		~~155~~152,~~628~~435			163,260
Less principal portion included in current liabilities		(1617,~~889~~453	)		(14,767	)
Total non-current portion of long-term debt	$	~~138~~134,~~739~~982		$	148,493

Note 12. Convertible debentures payable

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

	November 30,		May 31,
	February 28,		May 31,
	2025		2025
	2026		2025
5.20% Convertible Notes ("TLRY 27")	$	8688,~~255~~268	$	86,428
Deduct - current portion		—		—
Total convertible debentures payable, non current portion	$	8688,~~255~~268	$	86,428

TLRY 27 Notes

	November 30,			May 31,
	February 28,			May 31,
	2025			2025
	2026			2025
5.20% Contractual debenture	$	172,500		$	172,500
Debt settlement		(72,500	)		(67,500	)
Unamortized discount		(1311,~~745~~732	)		(18,572	)
Net carrying amount	$	8688,~~255~~268		$	86,428

The TLRY 27 convertible debentures were issued on May 30, 2023 and on June 9, 2023 by way of overallotment, in the principal amount of $172,500 (the “TLRY 27 Notes”). The TLRY 27 Notes bear interest at a rate of 5.20% per annum, payable semi-annually in arrears on June 15 and December 15 of each year, and mature on June 15, 2027, unless earlier converted. The TLRY 27 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 is not 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 TLRY 27 Notes into shares of Tilray’s Common Stock at their option, at any time, until the close of business on the second scheduled trading day immediately before June 15, 2027. The initial conversion rate is approximately 37.66 shares per $1,000 principal amount of TLRY 27 Notes, which represents a conversion price of approximately $26.55 per share. The conversion rate and conversion price will be subject to adjustment upon the occurrence of certain events.

The TLRY 27 Notes are now redeemable, in whole and not in part, at Tilray’s option at any time on or after June 20, 2025 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. If certain corporate events that constitute a fundamental change occur, then, subject to a limited exception, noteholders may require Tilray to repurchase their TLRY 27 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 TLRY 27 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 3,850,000 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 may be used by purchasers of the TLRY 27 Notes to sell up to 3,850,000 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 TLRY 27 Notes. The Company did not receive any proceeds from the sale of the Borrowed Shares.

During the ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company exchanged an aggregate $5,000 of its TLRY 27 Notes for cancellation, by issuing 1,259,182 shares of Common Stock and paying $6 in cash to settle accrued interest. Upon exchanging the TLRY 27 Notes, a portion of the settlement consideration was allocated to the equity component of the instrument and was recognized as a $1,158 reduction of additional paid-in capital in the Consolidated Statements of Stockholders’ Equity. Additionally, this repurchase resulted in a gain of $495 which was recorded in other non-operating (losses) gains, net as shown in Note 23 (Non-operating income (expense)). Following consummation of the exchange, the number of outstanding Borrowed Shares of Common Stock was reduced by 120,969 shares which were then returned as Treasury Stock. As of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, a total of 2,231,884 and 2,343,478 shares remained outstanding under the share lending arrangement, respectively. Current and prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on December 2, 2025.

During the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company recognized interest expense of $1,~~256~~ 300 and $23,~~623~~ 923 and accretion of amortized discount interest of $12,~~988~~ 013 and $35,~~964~~ 977 respectively. During the three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~2025, the Company recognized interest expense of $21,~~133~~957 and $46,~~375~~332 and accretion of amortized discount interest of $2,~~919~~766 and $58,~~985~~751 respectively.

As of ~~November~~February 3028, ~~2025~~2026, there was $100,000 principal outstanding compared to $105,000 principal outstanding as of May 31, 2025 under the TLRY 27 Notes.

Note 13. Warrant liability

Between September 5, 2025 and September 15, 2025, certain holders elected to exercise an aggregate of 620,900 of the Company’s issued and outstanding warrants in accordance with their terms. Pursuant to the exercise of such warrants, Tilray received $2,367 of cash consideration and delivered 620,900 shares of common stock to such holders. As of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, there were nil and 620,900 warrants outstanding respectively. Current and prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on December 2, 2025.

Note 14. 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 ~~November~~February 3028, ~~2025~~2026, the Company had issued and outstanding 116,~~522~~546,~~600~~939 shares of Common Stock, 321,391 shares of Treasury Stock (the “Treasury Stock”) and no 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 the ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company ~~issued~~had the following changes in shares of Common Stock:

a) 6,777,224 shares of Common Stock were issued pursuant to its At-the-Market (“ATM”) program, which generated gross proceeds of $76,643 and net proceeds of $73,056, after deducting $3,587 in commissions and other fees associated with these issuances.

b) 1,259,182 shares of Common Stock were issued in the amount of $4,800 to exchange the aggregate principal of $5,000 of its TLRY 27 Notes for cancellation. Upon exchanging the TLRY 27 Notes, a portion of the settlement consideration was allocated to the equity component of the instrument and was recognized as a $1,158 reduction of additional paid-in capital. Following consummation of the exchange, the number of outstanding Borrowed Shares of Common Stock was reduced by approximately 120,969 shares which were then returned as Treasury Stock, see Note 12 (Convertible debentures payable).

c) 620,900 shares of Common Stock were issued to settle exercised warrants. d) 861,707 shares of Common Stock were issued to settle dividends payable to the non-controlling shareholders of Aphria Diamond in the amount of $14,821. e) ~~935~~980,~~712~~703 shares of Common Stock were issued in connection with the exercise of previously awarded stock-based compensation awards, net of cancellations.

~~During~~f) ~~the~~20,652 ~~six~~shares ~~months~~of ~~ended November~~Common ~~30,~~Stock ~~2025,~~were cancelled pursuant to the ~~Company~~treatment ~~granted~~of ~~4,551,621~~fractional ~~time-based~~shares ~~Restricted~~in ~~Stock~~connection ~~Units~~with ~~(“RSUs”)~~the Reverse Stock Split.

During the ~~fiscal~~nine ~~year~~months ended ~~May~~February 3128, ~~2024~~2026, the Company ~~issued~~ ~~756,615 performance-based RSUs. These RSUs were not considered~~ granted ~~for accounting purposes at the time of issuance~~4, ~~as the performance conditions had not yet been established or approved and no amounts have been recorded within the Consolidated Statement of Income (Loss). During the intervening period~~554,321 ~~from their initial issuance to the current quarter, the total number of performance~~time-based ~~RSUs~~Restricted ~~was~~Stock ~~reduced~~Units ~~to 744,117 due to attrition. During the three months ended November 30, 2025, the Company established and approved the relevant performance targets for the performance-based~~ (“RSUs ~~and consequently considered them granted for accounting purposes~~”). In conjunction with this award, an additional component of these performance based grants are payable in cash or its equivalent in shares of Common Stock at the discretion of Company’s Compensation Committee. Given the expected settlement in Common Stock, the fair value of these awards has also been recorded as stock-based compensation, with the corresponding liability reflected on the Statement of Financial Position. As a result, during the three months ended November 30, 2025, the Company began accruing the fair value of these awards over the remaining requisite service period.

~~The~~During the fiscal year ended May 31, 2024, the Company's ~~total~~issued ~~stock-~~(i) 756,615 performance‑based ~~compensation~~restricted ~~expense~~stock ~~incurred~~units ~~for~~ (the ~~three~~ “Performance‑Based RSUs”) and ~~six~~(ii) ~~months~~an ~~ended November~~additional ~~30,~~performance‑based ~~2025 was~~award ~~$12~~payable in cash or,~~283 and~~ ~~$17~~at the discretion of the Company’s Compensation Committee,~~335~~ ~~compared~~in toshares $7of the Company’s common stock (the “Performance‑Based Elective Settlement Award,~~237~~ ” and ~~$14~~together with the Performance‑Based RSUs,~~154~~ the “Performance‑Based Awards”). The Performance‑Based Awards were not considered granted for accounting purposes at the ~~three~~ ~~and~~time ~~six~~of ~~months~~issuance because the applicable performance conditions had not 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 quarter ended ~~November~~February 3028, ~~2024~~ 2026, ~~respectively~~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 Awards were 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 is being recognized over the remaining requisite service period. The Company currently expects the Performance‑Based Elective Settlement Award to be settled in shares of common stock. Moreover, because the Performance‑Based Elective Settlement Award has a fixed monetary value and is settleable in a variable number of shares, it is classified as a liability within the statement of Financial Position. The Performance‑Based RSUs are classified as equity awards and are reflected within stockholders’ equity.

The Company’s total stock-based compensation expense incurred for the three and nine months ended February 28, 2026 was $13,725 and $31,060 compared to $4,035 and $18,189 for the three and nine months ended February 28, 2025, respectively.

All current and prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on December 2, 2025.

Note 15. Accumulated other comprehensive income (loss)

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

	Total
	Foreign
	currency
	translation
	gain (loss)
Balance May 31, 2024	$	(43,499	)
Other comprehensive income (loss)		3,622
Balance August 31, 2024	$	(39,877	)
Other comprehensive income (loss)		(8,080	)
Balance November 30, 2024	$	(47,957	)
Other comprehensive income (loss)		(4,978	)
Balance February 28, 2025	$	(52,935	)
Balance May 31, 2025	$	(43,063	)
Other comprehensive income (loss)		(167	)
Balance August 31, 2025	$	(43,230	)
Other comprehensive income (loss)		3,937
Balance November 30, 2025	$	(39,293	)
Other comprehensive income (loss)		(4,905	)
Balance February 28, 2026	$	(44,198	)

Note 16. 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: Enroot (75%), Aphria Diamond (51%), and Colcanna S.A.S. (90%).

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 ~~November~~February 3028, ~~2025~~2026:

				Aphria			ColCanna			~~November~~February 3028,
	Enroot			Diamond			S.A.S.			~~2025~~2026
Current assets	$	~~203~~202		$	6975,~~005~~233		$	32		$	6975,~~211~~437
Non-current assets		—			~~108~~107,~~486~~522			3,~~761~~759			~~112~~111,~~247~~281
Current liabilities		(412	)		(~~124~~127,~~948~~190	)		(7,~~030~~115	)		(~~131~~134,~~982~~317	)
Non-current liabilities		—			(31,~~529~~504	)		(1,~~440~~442	)		(32,~~969~~946	)
Net assets	$	~~199~~190		$	2124,~~014~~061		$	(4,~~706~~796	)	$	1619,~~507~~455

	SH		CC Pharma		Aphria			ColCanna			May 31,
	Acquisition		Nordic ApS		Diamond			S.A.S.			2025
Current assets	$	—	$	—	$	83,390		$	20		$	83,410
Non-current assets		—		—		114,677			3,348			118,025
Current liabilities		—		—		(126,986	)		(6,953	)		(133,939	)
Non-current liabilities		—		—		(31,720	)		(1,442	)		(33,162	)
Net assets	$	—	$	—	$	39,361		$	(5,027	)	$	34,334

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 the ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026:

				Aphria			ColCanna			~~November~~February 3028,
	Enroot			Diamond			S.A.S.			~~2025~~2026
Revenue	$	427		$	3146,~~258~~946		$	—		$	3146,~~262~~973
Total expenses		737			2437,~~762~~696			(~~736~~653	)		2437,~~033~~080
Net (loss) income		(310	)		69,~~496~~250			~~736~~653			79,~~229~~893
Other comprehensive (loss) income		—			~~1,120~~(72	)		(~~415~~422	)		~~705~~(494	)
Net comprehensive (loss) income	$	(310	)	$	79,~~616~~178		$	~~321~~231		$	79,~~934~~399
Non-controlling interest %		25	%		49	%		10	%	NA
Comprehensive (loss) income attributable to NCI		(13	)		34,~~732~~497			3223			34,~~763~~517
Net comprehensive (loss) income attributable to NCI	$	(13	)	$	34,~~732~~497		$	3223		$	34,~~763~~517

	SH			CC Pharma			Aphria			ColCanna			~~November~~February 3028,
	Acquisition			Nordic ApS			Diamond			S.A.S.			~~2024~~2025
Revenue	$	—		$	—		$	3653,~~429~~608		$	—		$	3653,~~429~~608
Total expenses		—20,000			56			2639,~~919~~557			~~793~~62			2759,~~717~~625
Net (loss) income		—(20,000	)		(56	)		914,~~510~~051			(~~793~~62	)		8(6,~~712~~017	)
Other comprehensive (loss) income		—			(13	)		(~~796~~1,568	)		~~434~~127			(~~363~~1,438	)
Net comprehensive (loss) income	$	—(20,000	)	$	(63	)	$	812,~~714~~483		$	~~(359~~65	)	$	8(7,~~349~~455	)
Non-controlling interest %		32	%		25	%		49	%		10	%	NA
Comprehensive (loss) income attributable to NCI		—(6,400	)		(21	)		46,~~270~~117			~~(36~~7	)		~~4,232~~(277	)
Net comprehensive (loss) income attributable to NCI	$	—(6,400	)	$	(21	)	$	46,~~270~~117		$	~~(36~~7	)	$	~~4,232~~(277	)

Note 17. 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 $31,~~546~~974 and $13,~~261~~235 for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, and $21,~~036~~203 and $24,~~922~~125 for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~2025. The income tax expense in the current period varies from the US statutory income tax rate and prior year period primarily due to the geographical mix of earnings and losses with no tax benefit resulting from valuation allowances in certain jurisdictions.

Note 18. Commitments and contingencies

Purchase and other commitments

The Company has financial commitments on long-term debt, refer to Note 11 (Long-term debt), convertible notes, refer to Note 12 (Convertible debentures payable), material purchase commitments inclusive of multi-period sponsorship rights and construction commitments as follows:

	Total		2026		2027		2028		2029		Thereafter
Long-term debt repayment	$	~~156~~153,~~626~~338	$	1617,~~889~~453	$	1311,~~624~~305	$	9493,~~715~~692	$	3,~~619~~697	$	27,~~779~~191
Convertible debentures payable		100,000		—		—		100,000		—		—
Material purchase obligations		6361,~~319~~930		3332,~~363~~529		2829,~~261~~401		~~615~~—		~~530~~—		~~550~~—
Construction commitments		12,~~209~~536		~~1,209~~881		—525		—551		—579		—
Total	$	~~321~~317,~~154~~804	$	5150,~~461~~863	$	41,~~885~~231	$	~~195~~194,~~330~~243	$	4,~~149~~276	$	2827,~~329~~191

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 may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of loss is not estimable, we do not 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 are not 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 been no material changes in the legal proceedings since our Annual Report on Form 10-K for the fiscal year ended May 31, 2025. or subsequent Quarterly Reports on Form 10-Q, except with respect to the legal proceedings disclosed below:

MMIRF, LLC v. Tilray Brands, Inc., et al.

On December 31, 2025, MMIRF, LLC filed a complaint in the Superior Court of California, Los Angeles County, against Tilray Brands, Inc., Serruya Private Equity Inc., Superhero Acquisition Corp., Superhero Acquisition L.P., Irwin Simon, Michael Serruya, and Denise Faltischek, asserting claims for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, and civil conspiracy against all defendants. The plaintiff allegedly is an assignee of claims previously possessed by MM CAN USA, Inc., a former subsidiary of MedMen Enterprises, Inc. (“MedMen”). The complaint alleges that, following a series of transactions in August 2021 pursuant to which Tilray (and other investors) acquired an interest in senior secured convertible notes of MedMen through its investment in Superhero Acquisition L.P. as a limited partner (as previously disclosed in a current report filed on Form 8-K on August 17, 2021), Tilray and the other defendants gained “de facto” control over, and thereby became fiduciaries of, MedMen. The complaint further alleges that the defendants breached those purported fiduciary duties in taking certain actions that detrimentally impacted MedMen’s business, which ultimately entered bankruptcy and receivership proceedings in April 2024. The plaintiff seeks damages in excess of $1.0 billion. The defendants’ deadline to move, answer, or otherwise respond to the complaint is currently March 30, 2026. Tilray intends to vigorously defend against the claims asserted in the complaint. Based on the information available as of the date of this Quarterly Report, management does not believe that a loss is probable or reasonably estimable, and accordingly no accrual has been recorded.

Summary of litigation accruals

As described in Note 10 (Accounts payable and accrued liabilities), the total estimated litigation expense accrual included in accrued liabilities as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025 was $1211,~~013~~931 and $12,431, respectively. During the intervening period, the accrual decreased by $410 from settled claims and decreased $90 due to a net change in the estimated likelihood of certain claim’s settlement, with the remaining change attributable to foreign exchange effects. This estimated accrual is intended to cover various ongoing litigation matters with probable losses that can be reasonably estimated.

Note 19. Net revenue

The Company reports Net revenue in four reporting segments: beverage, cannabis, distribution, and wellness. Net revenue for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~2025 were as follows:

For the three months ended

For the ~~six~~nine months ended

November 30,

February 28,

2025

2024

2025

2024

2026

2025

2026

2025

Beverage revenue

5344,~~552~~524

6658,~~861~~009

~~112~~156,~~064~~588

~~126~~184,~~024~~033

Beverage excise taxes

(31,~~469~~966

)

(32,~~780~~088

)

(68,~~242~~208

)

(69,~~971~~059

)

Net beverage revenue

5042,~~083~~558

6355,~~081~~921

~~105~~148,~~822~~380

~~119~~174,~~053~~974

Cannabis revenue

9083,~~208~~835

8772,~~208~~982

~~177~~261,~~943~~778

~~168~~241,~~402~~384

Cannabis excise taxes

(2219,~~676~~007

)

(2118,~~556~~708

)

(4564,~~900~~907

)

(4160,~~501~~209

)

Net cannabis revenue

6764,~~532~~828

6554,~~652~~274

~~132~~196,~~043~~871

~~126~~181,~~901~~175

Distribution revenue

8582,~~316~~963

6761,~~611~~493

~~159~~242,~~323~~286

~~135~~197,~~682~~175

Wellness revenue

1416,~~576~~383

14,~~606~~092

2946,~~820~~203

2943,~~358~~450

Total

~~217~~206,~~507~~732

~~210~~185,~~950~~780

~~427~~633,~~008~~740

~~410~~596,~~994~~774

Note 20. Cost of goods sold

The Company reports Cost of goods sold in four reporting segments: beverage, cannabis, distribution, and wellness. Cost of goods sold for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~2025 were as follows:

For the three months ended

For the ~~six~~nine months ended

November 30,

February 28,

2025

2024

2025

2024

2026

2025

2026

2025

Beverage costs

3428,~~351~~977

3735,~~925~~986

6897,~~764~~741

70106,~~975~~961

Cannabis costs

4138,~~398~~858

4232,~~475~~275

82121,~~639~~497

79111,~~529~~804

Distribution costs

7472,~~334~~951

5955,~~207~~936

~~140~~213,~~342~~293

~~119~~175,~~345~~281

Wellness costs

910,~~927~~992

109,~~123~~572

2031,~~297~~289

2029,~~219~~791

Total

~~160~~151,~~010~~778

~~149~~133,~~730~~769

~~312~~463,~~042~~820

~~290~~423,~~068~~837

Note 21. General and administrative expenses

General and administrative expenses for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~2025 were as follows:

For the three months ended

For the ~~six~~nine months ended

November 30,

February 28,

2025

2024

2025

2024

2026

2025

2026

2025

Salaries and wages

2421,~~764~~925

2221,~~726~~908

4668,~~500~~425

4466,~~293~~201

Office and general

89,~~284~~916

97,~~458~~385

1626,~~981~~897

1826,~~718~~103

Stock-based compensation

1213,~~283~~725

74,~~237~~035

1731,~~335~~060

1418,~~154~~189

Insurance

21,~~456~~894

32,~~155~~942

46,~~849~~743

58,~~610~~552

Professional fees

1,~~034~~090

1,~~126~~352

23,~~252~~342

23,~~304~~656

Gain on sale of capital assets

(~~134~~118

)

(~~505~~202

)

(~~375~~493

)

(~~531~~733

)

Travel and accommodation

1,~~292~~014

1,~~754~~100

23,~~604~~618

34,~~247~~347

Rent

~~1,196~~782

~~1,046~~726

2,~~082~~864

23,~~315~~041

Total

5150,~~175~~228

4539,~~997~~246

92142,~~228~~456

90129,~~110~~356

Note 22. 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 $~~965~~4,087 and $15,~~834~~921 for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to $6,~~869~~133 and $1117,~~116~~249 for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~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 Cannabis segment, during the ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company incurred restructuring~~-related~~ expenses totaling $15,~~834~~259. These charges included $~~670~~3,739 associated with the restructuring of the Quebec facility to transition from vegetable cultivation to cannabis cultivation in response to increased global cannabis demand, $~~843~~992 related to employee termination severance and benefits associated with the reorganization of the Canadian cannabis commercial function, and $177 related to the wind-down of certain non-operating entities. Additionally, the Company recognized $~~144~~ 351 related to its Fort Collins, CO partially vacant warehouse ~~recorded~~that ~~under~~was ~~assets~~ previously held of for sale and was divested during the three months ended February 28, 2026. See Note 3 (capital assets).

During the fiscal year ended May 31, 2025, the Company accrued $8,500 of restructuring charges related to the closure of Hop Valley and other Project 420 initiatives within the Beverage segment, of which $47,~~570~~511 was recognized in the ~~six~~nine months ended ~~November~~February 3028, ~~2025 thereby~~2026, thereby reducing the accrual to $3989. In addition,~~930~~ during the three and nine months ended February 28, 2026, the Company incurred $662 of restructuring related expenses associated with Atwater Brewing, primarily related to the asset being classified as held for sale and additional facility restructuring activities. See Note 3 (Capital Assets).

Note 23. Non-operating income (expense), net

Non-operating income (expense), net for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and three and ~~six~~nine months ended ~~November~~February 3028, ~~2024~~2025 were as follows:

	For the three months ended						For the ~~six~~nine months ended
	November 30,			November 30,			November 30,			November 30,
	February 28,			February 28,			February 28,			February 28,
	2025			2024			2025			2024
	2026			2025			2026			2025
Change in fair value of warrant liability	$	~~175~~—		$	~~862~~1,338		$	(3,495	)	$	12,~~558~~896
Foreign exchange gain (loss)		~~(10~~12,~~327~~469	)		(3322,~~797~~290	)		(39,~~399~~070	)		(2144,~~916~~206	)
(Loss) gain on long-term investments		(~~345~~4,143	)		(275,474	)		(~~306~~4,449	)		(665,540	)
Unrealized loss on digital assets		(~~164~~214	)		—			(~~172~~386	)		—
Other non-operating (losses) gains, net		(~~1,649~~20	)		~~(293~~2,404	)		(1,~~106~~126	)		~~(185~~2,219	)
Total	$	~~(12~~8,~~310~~092	)	$	(3324,~~255~~022	)	$	(~~8,478~~386	)	$	(2044,~~609~~631	)

The other non-operating losses (gains), net for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, were losses of $~~1,649~~20 and $1,~~106~~ 126, respectively, which ~~was~~were mainly comprised of a loss of $1,~~800~~501 on the change in fair value of assets held for sale related to the Fort Collins, CO partially vacant warehouse, as described in Note 3 (capital assets), offset by a gain of $495 resulting from the exchange transaction of the TLRY 27 Note, as described in Note 12 (Convertible debentures payable).

The other non-operating (losses) gains, net for the three and nine 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 TLRY 27 Note.

Note 24. Financial risk management and financial instruments

Financial instruments

The Company's classification of its financial instruments is described in Note 3 (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 ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, the Company had long-term debt of $2,~~216~~047 and $2,546, respectively, and the principal portion of convertible debentures payable of $100,000 and $105,000, 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 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.

The following tables present information about the Company’s assets and liabilities that are measured at fair value on a recurring basis as of ~~November~~February 3028, ~~2025~~2026 and May 31, 2025, and indicates the fair value hierarchy of the valuation techniques the Company utilized to determine such fair value:

							November 30,
							February 28,
	Level 1		Level 2		Level 3		~~2025~~2026
Financial assets
Cash and cash equivalents	$	~~246~~204,~~703~~620	$	—	$	—	$	~~246~~204,~~703~~620
Marketable securities		44,848		—		—		44,848
Restricted cash		44,885		—		—		44,885
Equity investments measured at fair value		4,229		1,004		8,160		13,393
Marketable securities		15,312		—		—		15,312
Digital assets		828		—		—		828
Equity investments measured at fair value		2,253		1,017		4,364		7,634
Total recurring fair value measurements	$	296,608	$	1,004	$	8,160	$	305,772
Digital assets		614		—		—		614
Total recurring fair value measurements	$	267,684	$	1,017	$	4,364	$	273,065

								*May 31,*
	*Level 1*		*Level 2*		*Level 3*			*2025*
Financial assets
Cash and cash equivalents	$	221,666	$	—	$	—		$	221,666
Marketable securities		34,697		—		—			34,697
Equity investments measured at fair value		909		1,063		8,160			10,132
Financial liabilities
Warrant liability		—		—		(1,092	)		(1,092	)
Contingent consideration		—		—		(15,000	)		(15,000	)
Total recurring fair value measurements	$	257,272	$	1,063	$	(7,932	)	$	250,403

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 the ~~six~~ nine months ended ~~November~~February 3028, ~~2025~~2026, the Company purchased 9.16 units of Bitcoin. Digital assets recorded at fair value have quoted prices in active markets for identical assets and are classified as Level 1. The following table presents the Company’s digital asset holdings as of ~~November~~February 3028, ~~2025~~2026:

	Quantity		Cost Basis		Fair Value		Cumulative Unrealized Gain (Loss)
Bitcoin		9.16	$	1,000	$	~~828~~614	$	(~~172~~386	)
Total digital assets		9.16	$	1,000	$	~~828~~614	$	(~~172~~386	)

Certain equity investments recorded at fair value have quoted prices in active markets for identical assets and are classified as Level 1. The Company classified securities with observable inputs as Level 2 and without a quoted market price as Level 3.

AAs ~~portion~~ of February ~~the~~28, ~~consideration~~2026 and May to31, be2025, ~~paid~~included inwithin ~~connection~~equity ~~with~~investment ~~the~~under ~~Company’s~~measurement ~~acquisition of~~alternative ~~Montauk Brewing Company (“Montauk”)~~ is ~~contingent~~an ~~upon~~option ~~the~~to ~~achievement~~acquire ofa 68% ~~certain~~membership ~~financial~~interest ~~measures~~in SH asAcquisition for ~~of December~~$1.00 ~~31,~~upon ~~2025~~U.S. Iffederal ~~achieved,~~cannabis ~~such~~legalization ~~contingent~~valued ~~consideration~~at is$4,364 ~~payable~~and in$8,160 ~~cash~~respectively. During the ~~six~~ three months ended ~~November~~February 3028, ~~2025~~2026, the ~~contingent~~fair ~~consideration~~value ~~amount was~~of ~~reassessed~~this ~~and~~option ~~was~~decreased ~~estimated~~ by ~~applying~~$3,796 ~~a probability~~due ofto ~~achievement~~changes ofin ~~0% on~~ the ~~$15,000~~discounted ~~sales~~cash ~~earn-out~~flow ~~component~~model ~~and~~used 0%to onvalue the ~~remaining~~underlying ~~criteria~~business. ~~The~~Specifically, ~~Montauk~~projected ~~contingent~~cash ~~earn-out~~flows isassociated nowith ~~longer expected~~retail tooperations bewere ~~achieved~~reduced ~~based~~to on$nil ~~Montauk's~~as ~~current~~a ~~operating~~result ~~results~~of restructuring activities, ~~and~~with asthe ~~such~~remaining ~~resulted~~valuation inattributable asolely ~~corresponding~~to ~~change in~~projected ~~fair~~brand-related ~~value~~cash offlows. ~~$15,000~~The ~~for the~~valuation ~~contingent~~continues ~~consideration~~to ~~liability~~assume ~~recognized. The~~a ~~unobservable~~70% ~~inputs~~probability ~~into~~of ~~the~~U.S. ~~future~~federal ~~expected~~cannabis ~~cash~~legalization, ~~outflows~~which ~~result~~is inrequired afor ~~fair~~the ~~value~~option ~~measurement~~to ~~classified~~become exercisable, as ~~Level 3~~further described below.

~~The~~A ~~balances~~portion of ~~assets~~the ~~and~~total ~~liabilities~~consideration ~~categorized~~to ~~within~~be ~~Level~~paid in connection with the Company’s acquisition 3of Montauk Brewing Company (“Montauk”) was contingent upon the achievement by Montauk of certain financial measures as of December 31, 2025. In the ~~fair~~event ~~value~~that ~~hierarchy~~Montauk ~~measured~~achieved ateither ~~fair~~the ~~value~~pre-determined sales onvolume atarget ~~recurring~~or ~~basis~~EBITDA ~~are~~target, ~~reconciled~~then $15,000 of ascontingent ~~follows~~consideration ~~for~~would be deemed earned and payable. If both the ~~period ended November~~sales 30volume target and the EBITDA target were achieved, ~~2025:~~an additional $3,000 would be deemed earned and payable for a total contingent consideration payment of $18,000.

For the year ended, May 31, 2025, the Company assessed the estimated value of the contingent consideration liability as $15,000, which was estimated to be achieved based on management’s forecast, applying a probability of achievement of 100% for the sales volume target and 0% on the remaining criteria, which was not expected to be achieved as EBITDA targets were not forecasted to be met.

During the three 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, July and August 2025, and the loss of certain national retail programs, management concluded that Montauk no 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 statement of profit and loss and contributed to the Company’s net income generated during the period ended August 31, 2025, despite historically reporting a net loss.

During the three months ended February 28, 2026, the earn-out period concluded and neither financial measure was achieved. Accordingly, no further changes to the fair value of the contingent consideration liability were recognized during the three months ended February 28, 2026 as no 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 was a Level 3 fair value measurement.

The balances of assets and liabilities categorized within Level 3 of the fair value hierarchy measured at fair value on a recurring basis are reconciled, as follows for the period ended February 28, 2026:

	Equity			Warrant			Contingent
	Investments			Liability			Consideration
Balance, May 31, 2025	$	8,160		$	(1,092	)	$	(15,000	)
Unrealized gain (loss) on fair value		—(3,796	)		(3,495	)		15,000
Instruments exercised		—			4,587			—
Balance, November 30, 2025	$	8,160		$	—		$	—
Balance, February 28, 2026	$	4,364		$	—		$	—

													APHA 24
	Convertible			Equity			Warrant			Contingent			Convertible
	notes receivable			Investments			Liability			Consideration			Debt
Balance, May 31, 2024	$	32,000		$	5,500		$	(3,253	)	$	(15,000	)	$	(330	)
Additions/(Repayments)		—			—			—			—			330
Additions/(disposals)		(12,000	)		8,160			—			—			330
Unrealized gain (loss) on fair value		—			—			1,558			—			—
Redemption		—			—			—			—			—
Balance, November 30, 2024	$	32,000		$	5,500		$	(1,695	)	$	(15,000	)	$	—
Unrealized gain (loss) on fair value		—			(5,500	)		2,896			—			—
Impairments		(20,000	)		—			—			—			—
Balance, February 28, 2025	$	—		$	8,160		$	(357	)	$	(15,000	)	$	—

The unrealized gain (loss) on ~~fair~~assets ~~value~~and ~~for~~liabilities ~~the~~categorized ~~convertible~~within ~~debenture,~~Level 3 of the ~~warrant~~fair ~~liability,~~value ~~contingent~~hierarchy ~~consideration, and debt securities classified under available-for-sale method is~~ are recognized in the consolidated statements of loss and comprehensive loss using the following inputs:

		Significant
	Valuation	unobservable
Financial asset / financial liability	technique	input	Inputs
Contingent consideration	Discounted cash flows	Probability of achievement	0%
Equity investments	Discounted cash flows	Probability of achievement	70%

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 been no changes to the Company’s capital management approach in the period. The Company considers its cash and cash equivalents and marketable securities as capital.

Note 25. 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 in four 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, and 4) 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 have not been aggregated and no asset information is provided for the segments because the Company’s CODM does not 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:

For the three months ended

For the ~~six~~nine months ended

November 30,

February 28,

2025

2024

2025

2024

2026

2025

2026

2025

Beverage

Net beverage revenue

5042,~~083~~558

6355,~~081~~921

~~105~~148,~~822~~380

~~119~~174,~~053~~974

Beverage costs

3428,~~351~~977

3735,~~925~~986

6897,~~764~~741

70106,~~975~~961

Beverage gross profit

1513,~~732~~581

2519,~~156~~935

3750,~~058~~639

4868,~~078~~013

Cannabis

Net cannabis revenue

6764,~~532~~828

6554,~~652~~274

~~132~~196,~~043~~871

~~126~~181,~~901~~175

Cannabis costs

4138,~~398~~858

4232,~~475~~275

82121,~~639~~497

79111,~~529~~804

Cannabis gross profit

2625,~~134~~970

2321,~~177~~999

4975,~~404~~374

4769,~~372~~371

Distribution

Distribution revenue

8582,~~316~~963

6761,~~611~~493

~~159~~242,~~323~~286

~~135~~197,~~682~~175

Distribution costs

7472,~~334~~951

5955,~~207~~936

~~140~~213,~~342~~293

~~119~~175,~~345~~281

Distribution gross profit

10,~~982~~012

85,~~404~~557

1828,~~981~~993

1621,~~337~~894

Wellness

Wellness revenue

1416,~~576~~383

14,~~606~~092

2946,~~820~~203

2943,~~358~~450

Wellness costs

910,~~927~~992

109,~~123~~572

2031,~~297~~289

2029,~~219~~791

Wellness gross profit

45,~~649~~391

4,~~483~~520

914,~~523~~914

913,~~139~~659

Total

Total revenue

~~217~~206,~~507~~732

~~210~~185,~~950~~780

~~427~~633,~~008~~740

~~410~~596,~~994~~774

Total costs

~~160~~151,~~010~~778

~~149~~133,~~730~~769

~~312~~463,~~042~~820

~~290~~423,~~068~~837

Total gross profit

5754,~~497~~954

6152,~~220~~011

~~114~~169,~~966~~920

~~120~~172,~~926~~937

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

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

	For the three months ended						For the ~~six~~nine months ended
	November 30,			November 30,			November 30,			November 30,
	February 28,			February 28,			February 28,			February 28,
	2025			2024			2025			2024
	2026			2025			2026			2025
Gross profit	$	5754,~~497~~954		$	6152,~~220~~011		$	~~114~~169,~~966~~920		$	~~120~~172,~~926~~937
Operating expenses:
General and administrative		5150,~~175~~228			4539,~~997~~246			92142,~~228~~456			90129,~~110~~356
Selling		1110,~~781~~617			1613,~~162~~905			2435,~~704~~321			2741,~~852~~757
Amortization		45,~~358~~106			2223,~~927~~182			813,~~287~~393			4467,~~731~~913
Marketing and promotion		98,~~981~~692			96,~~720~~793			2028,~~136~~828			2128,~~286~~079
Research and development		7862			6085			~~119~~181			~~165~~250
Change in fair value of contingent consideration		—			—			(15,000	)		—
Litigation costs, net of recoveries		869			901			1,876			2,496
Impairment of intangible assets and goodwill		—			699,235			—			699,235
Restructuring costs		965			6,869			1,834			11,116
Other than temporary change in fair value of convertible notes receivable		—			20,000			—			20,000
Transaction costs (income), net		569			802			969			1,958
Litigation costs, net of recoveries		621			2,758			2,497			5,254
Total operating expenses		79,776			103,438			135,153			199,714
Restructuring costs		4,087			6,133			5,921			17,249
Operating loss		(22,279	)		(42,218	)		(20,187	)		(78,788	)
Transaction costs (income), net		1,927			605			2,896			2,563
Interest expense, net		(5,374	)		(7,766	)		(12,070	)		(17,608	)
Total operating expenses		81,340			811,942			216,493			1,011,656
Non-operating income (expense), net		(12,310	)		(33,255	)		(8,478	)		(20,609	)
Operating loss		(26,386	)		(759,931	)		(46,573	)		(838,719	)
Loss before income taxes		(39,963	)		(83,239	)		(40,735	)		(117,005	)
Interest expense, net		(4,965	)		(8,378	)		(17,035	)		(25,986	)
Income tax expense (recovery), net		3,546			2,036			1,261			2,922
Non-operating income (expense), net		8,092			(24,022	)		(386	)		(44,631	)
Net loss	$	(43,509	)	$	(85,275	)	$	(41,996	)	$	(119,927	)
Loss before income taxes		(23,259	)		(792,331	)		(63,994	)		(909,336	)
Income tax expense (recovery), net		1,974			1,203			3,235			4,125
Net loss	$	(25,233	)	$	(793,534	)	$	(67,229	)	$	(913,461	)

Channels of Cannabis revenue were as follows:

For the three months ended

For the ~~six~~nine months ended

November 30,

February 28,

2025

2024

2025

2024

2026

2025

2026

2025

Revenue from Canadian medical cannabis

65,~~234~~979

65,~~673~~839

1218,~~380~~359

1218,~~934~~773

Revenue from Canadian adult-use cannabis

6252,~~448~~570

5949,~~077~~315

~~126~~179,~~515~~085

~~116~~165,~~312~~627

Revenue from wholesale cannabis

1,~~346~~165

63,~~593~~893

56,~~501~~666

1215,~~100~~993

Revenue from international cannabis

2024,~~180~~121

1413,~~865~~935

3357,~~547~~668

2740,~~056~~991

Less excise taxes

(2219,~~676~~007

)

(2118,~~556~~708

)

(4564,~~900~~907

)

(4160,~~501~~209

)

Total

6764,~~532~~828

6554,~~652~~274

~~132~~196,~~043~~871

~~126~~181,~~901~~175

Geographic net revenue:

For the three months ended

For the ~~six~~nine months ended

November 30,

February 28,

2025

2024

2025

2024

2026

2025

2026

2025

USA

5751,~~838~~683

7164,~~753~~420

~~121~~173,~~799~~482

~~135~~200,~~633~~053

Canada

5448,~~173~~221

5645,~~720~~930

~~112~~160,~~340~~561

~~112~~158,~~625~~555

EMEA

~~103~~104,~~155~~955

7972,~~254~~386

~~188~~293,~~408~~363

~~156~~229,~~926~~312

Rest of World

21,~~341~~873

3,~~223~~044

46,~~461~~334

58,~~810~~854

Total

~~217~~206,~~507~~732

~~210~~185,~~950~~780

~~427~~633,~~008~~740

~~410~~596,~~994~~774

Geographic capital assets:

	November 30,		May 31,
	February 28,		May 31,
	2025		2025
	2026		2025
USA	$	~~193~~188,~~897~~500	$	200,003
Canada		~~253~~251,~~515~~645		267,458
EMEA		98,~~446~~571		97,371
Rest of World		4,~~243~~292		3,601
Total	$	~~550~~543,~~101~~008	$	568,433

Major customers are defined as customers that are materially significant to the Company’s annual revenues. For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and ~~2024~~2025, there were no major customers representing a material contribution to our quarterly revenues.

Note 26. Subsequent Events

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”). Under the BrewDog BASA, Tilray UK acquired certain business operations and assets of BrewDog plc and certain of its subsidiary undertakings (collectively, the “BrewDog Group”) through a pre-packaged administration process in Scotland under the Insolvency Act 1986, with the intent for Tilray UK to carry on the acquired business operations and assets as a going concern. . The assets acquired included the brewery located in Ellon, Aberdeenshire, Scotland (the “UK Brewery”), the on-line business, the retail business, 11 of the BrewDog strategic brewpubs in Scotland, England and Ireland and all the 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 purchase price was £33,000 (approximately $44,100).

On March 9, 2026, the Company acquired BrewDog Brewing Australia Pty Ltd., which included BrewDog’s Australian brewery, along with two hospitality venues in Australia for a nominal consideration.

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 purchase price for BrewDog’s U.S. assets is equal to $9,296.

On March 23, 2026, the Company acquired 5 additional BrewDog brewpubs in Scotland and England for a purchase price of £348 (approximately $466).

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the Unaudited Interim Consolidated Financial Statements and the related Notes thereto for the three month period ended ~~November~~February 3028, ~~2025~~2026 contained in this Quarterly Report on Form 10-Q (“Form 10-Q”) and the Audited Consolidated Financial Statements and the related Notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025, as well as in conjunction with the sections entitled “Item 1A. Risk Factors” and “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended May 31, 2025 and in the section entitled “Item 1A. Risk Factors” in this Form 10-Q. Forward looking statements in this Form 10-Q are qualified by the cautionary statement included in this Form 10-Q under the sub-heading “Cautionary Note Regarding Forward-Looking Statements” in the introduction of this Form 10-Q.

Company Overview

Tilray Brands, Inc., a Delaware corporation (collectively, along with its subsidiaries, the “Company”, “Tilray”, “we”, “us” and “our”), is a leading global lifestyle consumer products company, which was incorporated on January 24, 2018 and is headquartered in Leamington and New York, with operations in Canada, the United States, Europe, Australia and Latin America that is leading as a transformative force at the nexus of cannabis, beverage, wellness, and entertainment, elevating lives through moments of connection. Tilray’s mission is to be a leading premium lifestyle company with a house of brands and innovative products that inspire joy, wellness and create memorable experiences.

Our overall strategy is to leverage our brands, infrastructure, expertise and capabilities to drive revenue growth in the industries in which we compete, achieve industry-leading profitability and build sustainable, long-term shareholder value. In order to ensure the long-term sustainable growth of our Company, we continue to focus on developing strong capabilities in data analytics and consumer insights, drive category management leadership and assess opportunities for the introduction of new categories, products and entries into new geographies. In addition, we are relentlessly focused on managing our cost structure and expenses in order to maintain our strong financial position. Finally, our experienced leadership team provides a strong foundation to accelerate our growth. Our management team is complemented by experienced operators, cannabis industry experts, veteran beer and beverage industry leaders and leaders that are well-established in wellness and better-for-you products, all of whom apply an innovative and consumer-centric approach to our businesses.

Trends and Other Factors Affecting Our Business

Beverage market trends:

Within the beverage category, we expect the following key trends to continue to shape the near-term outlook in this segment:

- Beverage Distribution. In furtherance of our strategic vision, we remain focused on enhancing ~~our~~the relevance of our brands within their home markets with mission critical SKUs, focusing on growing our core brands in their core markets and on driving growth of our highest margin SKUs within these brands. Through targeted efforts, we continue to strategically optimize our price/pack/channel architecture and drive distribution to continue to execute against our craft beer strategy, streamlining our business, enhancing our relevance and focusing resources on our core markets. The ~~2025~~2026 preliminary Spring retail ~~product~~ resets ~~demonstrated~~resulted ~~improvements~~ in ~~the distribution of our core brands and key~~ innovation ~~initiatives, including Shock Top, Runner’s High non-alcoholic, and SweetWater Brewing’s newly launched Day Trip and Dive Beer amongst others. We have started to see the impact of these~~ gains ~~throughout~~in ~~fiscal~~emerging ~~year 2026~~categories.

- Innovation. In the United States, we have been closely monitoring consumer beverage trends, which have included consumers drinking less beverage alcohol products and, when consuming alcoholic beverages, the increasing demand for ready-to-drink cocktail options. To address these trends, we have engaged in strategic innovation based on ~~data~~category analysis, consumer insights, and portfolio diversification into alternative beverage options. For ~~the~~consumers ~~consumer~~ seeking to reduce their beverage alcohol consumption, ~~our~~the ~~recent~~portfolio ~~innovations~~continues ~~include~~to ~~launching~~scale aacross ~~portfolio~~non‑alcoholic ~~of Non-Alcoholic~~ craft beer, ~~sparkling~~clean‑label ~~waters~~energy ~~under~~drinks ~~our~~fortified ~~Liquid~~with ~~Love brand~~vitamins, and ~~clean~~10 ~~label~~Barrel ~~energy~~Clean ~~drinks~~Slate, ~~fortified~~a ~~with~~functional ~~vitamins~~non‑alcoholic cocktail offering. Our other innovative products include Hemp Derived Delta-9 (HD-D9) beverages. Although new U.S. federal legislation was recently enacted that will restrict the production and sale of our HD‑D9 beverages beginning in November 2026, we believe that new regulations could evolve prior to that date to permit continued sales of HD-D9 beverages ~~under the recent executive order directing the U~~.S. ~~rescheduling of cannabis products.~~ These strategic innovations underscore our commitment to offering high-quality options across a diverse range of beverage categories, positioning us for sustained growth by meeting consumer demand and differentiation in the competitive beverage segment.

Brew Pubs. We currently operate 17 brew pubs, including our Breckenridge Distillery restaurant and tasting room, in geographic regions across the U.S. and core markets for the associated craft brands. An important part of our strategic plan for our craft beer business centers on the role that brew pubs play in promoting and showcasing the distinct, regional positioning of our various craft beer brands. They provide our consumers with a venue in which to connect with others and have an immersive brand experience which serves to enhance brand loyalty and drive immediate and long-term revenue growth. We also believe that our brew pub strategy fuels trial and innovation by allowing us to curate unique small batch product offerings in targeted test markets.

In the spirits category, Breckenridge Distillery combines premium craftsmanship, award-winning quality, and experiential tourism appeal, reinforcing its niche as a lifestyle-driven spirits brand. ~~The~~Recently included in Newsweek's “Best Bourbon 2026” list, the distillery has earned multiple prestigious accolades across Whiskey, Gin, and Vodka, including three Icons of Whisky awards, ten Best American Blended Whiskey honors at the World Whiskies Awards, and recognition as Colorado Distillery of the Year. ~~Recent achievements include~~ Breckenridge ~~Reserve Port Cask Finish being named the World’s Best Finished Bourbon at the 2024 World Whiskies Awards. Breckenridge~~ Distillery products are available in all 50 states, with continued planned expansion and product innovations. Recent launches include Mock One – a non-alcoholic spirits line, Mountain Shot – flavored whiskey in convenient pouches, and Casa Breck Tequila, all underscoring our commitment to innovation and evolving consumer preferences. Despite prevailing challenges within the overall spirits market, we believe our focus on whiskey—a resilient segment—combined with our award-winning portfolio and innovative product introductions, positions Breckenridge Distillery for sustained growth and enhanced market presence.

Canadian cannabis market trends:

The cannabis industry in Canada continues to evolve given how nascent the industry is with federal legalization of adult-use cannabis occurring just over five years ago. Through analysis of the current market conditions, the following key trends have emerged and are anticipated to influence the near-term future in the Canadian cannabis industry:

- Market share. During the fiscal quarter, Tilray continued to lead the Canadian market with the highest cannabis revenue in Canada. ~~Additionally~~However, during the fiscal quarter, we experienced a ~~marginal~~ decrease in market share in Canada from 9.43% to 98.35% from the immediately preceding quarter as reported by Hifyre data for all provinces, excluding Quebec where Weedcrawler was deemed more accurate. The ~~current~~decline ~~period~~primarily reflected a 175 basis point decrease in ~~market~~the ~~share~~whole ~~reflects~~flower ~~our~~category ~~strength~~resulting infrom ~~flower~~a planned cultivation strain rotation that temporarily impacted supply, and ~~non~~a 728 basis point decrease in the straight-~~infused~~edge pre-‑roll ~~categories~~category ~~which~~due ~~was~~to ~~offset~~an out‑of‑stock experienced by ~~our~~a ~~lower~~componentry ~~participation~~vendor indespite ~~specific~~maintaining ~~categories~~a ~~experiencing~~market ~~the~~leading ~~most~~position ~~price~~within ~~compression~~this category. ~~Additionally,~~These wedeclines ~~continue~~were partially offset by a 547 basis point increase in the blunts category. The Company continues to enhance ~~our~~its global supply chain and ~~increase~~expand ~~our~~its cultivation footprint to support ~~the growing~~ demand ~~for~~across ~~our product in both~~ Canadian and international ~~cannabis~~ markets. InDuring the ~~meantime~~fiscal quarter ended February 28, we2025, ~~continue~~the toCompany opportunistically ~~redirect~~redirected ~~certain~~approximately ~~inventories~~0.8 Metric Tons to international ~~cannabis~~ markets, which isare expected to generate higher margin sales.

- Consumer preferences and Price compression. Licensed producer consolidation has progressed more gradually than anticipated, while retailer consolidation has increased the negotiating leverage of larger retailer accounts. At the same time, consumer preferences continue to evolve. Demand is shifting toward manufactured formats such as infused pre‑rolls, beverages, edibles, and vapes, reflecting a broader premiumization and convenience trend within the category. Historical price compression in specific categories is expected to persist in the market, intensified by fierce competition among the approximately 1,000 Licensed Producers in Canada. The fixed impact of excise per gram, notwithstanding the decline in average selling prices, further compounds these challenges, and has promoted ongoing industry lobbying efforts.

International cannabis trends:

We are a global leader in the development, production, distribution, marketing and sale of pharmaceutical-grade medical cannabis products. The cannabis industry in Europe is still in its early stages of development and countries within Europe are at different stages of medical ~~and adult-use~~ cannabis legalization. ~~The~~Meaningful ~~most meaningful~~ progress toin ~~date has been~~ the legalization and regulation of cannabis for medical purposes, ~~which~~ has now taken place in more than 1921 countries representing a population of more than ~~477~~ 526 million people (Germany, UK, Italy, Poland, Netherlands, Czech Republic, Greece, Portugal, Austria, Switzerland, Denmark, Croatia, Malta, Luxembourg, Ukraine, Sweden, Norway, Türkiye, Ireland, Spain and Israel). Beyond this, some countries have expressed a clear political ambition to legalize adult-use cannabis (Portugal and Luxembourg), some are engaging in ~~experiments~~programs for adult-use legalization (Germany, Netherlands, Malta, Czech Republic and Switzerland) and some are debating regulations for cannabinoid-based medicine (France ~~and Spain~~). In Europe, we believe that, despite continuing recessionary economic conditions, political uncertainty in various countries and the continuing Russian conflict with Ukraine, cannabis legalization (both medicinal and adult-use) will continue to gain traction albeit more slowly than originally expected. This is evidenced by the cannabis regulations in Germany adopted on April 1, 2024, which we believe will serve as a catalyst for continued changes in drug policy throughout Europe. Outside of Europe and North America, the cannabis industry is also incontinuing ~~its~~to ~~early stages of development~~ develop with Australia representing one of the larger markets and with some Latin American countries also growing their respective medical cannabis markets, such as Argentina, Panama, Colombia and Brazil.

We continue to believe that Tilray remains uniquely well-positioned to maintain and gain significant market share in the markets in which we participate. We benefit from our end-to-end vertically-integrated infrastructure in major markets and well-placed investments, which are comprised of two EU-GMP cultivation facilities located in Portugal and Germany; our fully owned route-to-market encompassing sales, marketing and distribution infrastructure in Germany, Australia and Italy; a network of leading distributors who we work with in the various other countries in which we participate; and, our extensive genetics portfolio and demonstrated commitment and expertise related to the cultivation and production of high-quality, safe cannabis products. Tilray’s International business also benefits from the depth and breadth of knowledge, experience, relationships and infrastructure we have gleaned from our leading participation and investment into the Canadian medical and adult-use markets. Tilray is proudly pioneering the effort to further understand the therapeutic value of cannabis through strategic ~~the guidance of its independent Medical Advisory board and through~~ partnerships with leading research institutions globally, where Tilray is currently supporting clinical trials around the world studying the efficacy of cannabis in treading various indications. We believe that these assets and attributes, combined with our ability to navigate complex regulatory environments, will continue to drive our leadership in international medical markets and allow us to successfully enter new markets as they adopt medical cannabis and potentially adult-use regulations and may also serve to support a potential U.S. participation.

Germany. Today, Germany remains the largest medical cannabis market in Europe.

We continue to believe that Tilray is well-positioned in Germany, especially considering the enactment of MedCanG and given that we are one of only three manufacturers of medical cannabis in Germany since our wholly owned subsidiary, Aphria RX, was awarded the first license for the cultivation of medical cannabis in Germany by the BfArM under the liberalized regime. Said license ~~will~~improves ~~improve~~ our ability to meet the needs of patients and ~~provide~~provides cannabis of the utmost quality and enhanced availability to a broader market.

As the market continues to mature, we have seen increased demands and differentiation specifically with medical cannabis flowers. In response, we have launched ~~Redecan~~ ARX and Good Supply brands and related medical cannabis products, which provides the patient with a segmented portfolio of products while we continue to deliver on the trust, safety and consistency that has become expected from our Tilray Medical brand.

Poland. In Poland, cannabis was legalized for medical use in 2018 and is prescribed to patients by a physician and dispensed by pharmacies. Today, all doctors in Poland are allowed to prescribe medical cannabis and it is a self-pay market as medical cannabis is not refundable by the Polish health service. Tilray is a leading supplier of medical cannabis in Poland through our network of distributor partnerships. We predominantly supply the market with whole flower medical cannabis products.

United Kingdom. Since November 2018, doctors in the UK have been able to prescribe medical cannabis for medicinal use for patients with medical conditions that had failed to respond to first-line medications. The market today is predominantly all self-pay and prescriptions are facilitated by private clinics. Today, we supply the UK market with mainly whole flower products from brands ~~both~~such ~~the~~as ~~Tilray~~Good ~~Medical~~Supply ~~and Broken Coast brands~~ through our distributor partners with sights on growing our portfolio to extracts and other formats.

Ireland. In June 2019, the Minister for Health signed legislation allowing for the operation of the Medical Cannabis Access Programme (“MCAP”) on a pilot basis for five years. The MCAP allows a medical consultant to prescribe a cannabis-based treatment for a narrow set of specified medical conditions, where the patient has failed to respond to standard treatment. Reimbursement is available for products which have received the appropriate approvals. Tilray was one of the first players to enter the Irish market and is one of a few suppliers which has received approval for its products to be prescribed and to have been granted reimbursement status. Today, we supply our approved extract product to Ireland through our distribution partner.

Italy. In May 2023, Tilray Medical received authorization from Italy’s Ministry of Health to distribute three new medical cannabis compounds. These medical cannabis compounds are distributed by FLTilray ~~Group,~~medical ~~our wholly-owned subsidiary,~~ Italia to pharmacies across Italy. ~~With~~We ~~FL Group, we~~ have an established broad national pharmaceutical distribution network in Italy, where medical cannabis is prescribed by doctors and reimbursed by the healthcare system to eligible patients. In 2025, Tilray has received additional cannabis flower and extract product authorizations and has formed a strategic partnership with Molteni Farmaceutici with the commitment to broaden the availability of Tilray Medical products for patients across Italy.

Australia. In 2016, the Australian Government legalized medicinal cannabis, which is regulated by the Therapeutic Goods Administration. Medical cannabis is prescribed by a doctor but there is no coverage under the Pharmaceutical Benefits Scheme. Tilray Medical supplies the market with a wide portfolio of medical cannabis extracts as well as whole flower products. As the market continues to mature, we have seen increased demands and differentiation specifically with medical cannabis flowers. In response, we launched the Broken Coast, Redecan and Good Supply brands and products, which provides the patient with a segmented portfolio of products while we continue to deliver on the trust, safety and consistency that has become expected from our Tilray Medical brand.

Luxembourg. Luxembourg established its medical cannabis framework in 2018, with the national program operational since February 2019. Medical cannabis is tightly regulated, accessible only through trained physicians and dispensed exclusively via hospital pharmacies. Prescriptions are limited to patients with defined, severe medical conditions, and all treatments are covered by public health insurance. In January 2025, Luxembourg updated its regulations to phase-out high-THC flower products, now permitting only balanced or high-CBD flower and oil-based extracts. This shift reflects the government’s commitment to standardized, pharmaceutical-grade cannabis therapies and patient safety. Tilray Deutschland GmbH was awarded the official government tender in 2025 to supply medical cannabis flower, demonstrating our leadership in centralized procurement and compliance with Luxembourg’s rigorous standards.

Portugal. Portugal legalized medical cannabis in July 2018. The regulatory framework is overseen by INFARMED, requiring Market Placement Authorization (ACM) for all non-pharmaceutical cannabis products, with strict GACP and GMP compliance. While domestic patient access remains limited due to stringent product approvals and the absence of public reimbursement, Portugal has emerged as a leading European producer and exporter of medical cannabis, supplying high-value markets such as Germany, Poland, and Australia. In 2021, Tilray received the first Authorization for Placement on the Market for dried flower, with additional product approvals in 2024, reinforcing our pioneering role in Portugal’s medical cannabis sector. Our strategic investments in cultivation and manufacturing, combined with robust compliance and documentation standards, enable Tilray to deliver EU-GMP quality products to both domestic and international markets. As Portugal explores adult-use reform, we expect that Tilray’s established reputation and operational excellence position us to capitalize on future regulatory developments and market expansion.

Wellness market trends:

Tilray Wellness’s branded business continues to grow across brick-and-mortar retail as well as ecommerce, ~~further~~which ~~establishing~~we believe further establishes its leading market share position in better-for-you categories. The Company continues to focus on value-added innovation within natural and organic food and beverages across branded and ingredient sales. We continue to participate in multiple growing categories including super-seeds, better for you breakfast, better for you snacking, and natural energy drinks. Within our Ingredients sales business, we have expanded our range of offerings in hemp protein and hemp oil, helping us further develop our business in North America and Asia.

Acquisitions, Strategic Transactions and Synergies

We strive to continue to expand our business, on a consolidated basis, through a combination of organic growth and acquisition. While we continue to execute against our strategic initiatives that we believe will result in long-term, sustainable growth and value to our stockholders, we continue to evaluate potential acquisitions and other strategic transactions of businesses that we believe complement our existing portfolio, infrastructure and capabilities or provide us with the opportunity to enter attractive new geographic markets and product categories as well as expand our existing capabilities. In addition, we have exited certain businesses and continue to evaluate certain businesses within our portfolio that are dilutive to profitability and cash flow. As a result, we incur transaction costs in connection with identifying and completing acquisitions and strategic transactions, as well as ongoing integration and restructuring costs as we combine acquired companies and continue to achieve synergies, which is offset by income generated in connection with the execution of these transactions. For the ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, we incurred $12.0 9 million of transaction expenses, as discussed further below in the results of operations assessment.

BrewDog Acquisitions:

Subsequent to the period ended February 28, 2026, on March 2, 2026, Tilray UK, a wholly owned subsidiary of the Company, entered into the BrewDog BASA. Under the BrewDog BASA, Tilray UK acquired certain business operations and assets of BrewDog plc and certain of its subsidiary undertakings (collectively, the “BrewDog Group”) through a pre-packaged administration process in Scotland under the Insolvency Act 1986, with the intent for Tilray UK to carry on the acquired business operations and assets as a going concern. The assets acquired included the UK Brewery, the online business, the retail business, 11 of the BrewDog strategic brewpubs in Scotland, England and Ireland and all the intellectual property rights relating to the BrewDog brand, including well known sub-brands such as Punk IPA, Hazy Jane, Wingman, Elvis Juice and Dead Pony Club. The purchase price was £33.0 million (approximately $44.1 million).

In a separate transaction completed on March 9, 2026, the Company acquired BrewDog Brewing Australia Pty Ltd., which included BrewDog’s Australian brewery, along with two hospitality venues in Australia for a nominal consideration.

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 purchase price for BrewDog’s U.S. assets is equal to $9.3 million.

On March 23, 2026, the Company acquired 5 additional BrewDog brewpubs in Scotland and England for a purchase price of £0.3 million (approximately $0.5 million). See Note 26 (Subsequent Events).

One of the world’s most recognized names in craft beer, BrewDog is a brand-powered, vertically integrated beverage and hospitality platform. Founded in 2007, BrewDog quickly became one of the largest independent craft beer brands in the United Kingdom with its portfolio of iconic craft, premium and low and no alcohol beer brands, including Punk IPA, Hazy Jane, Lost Lager and Wingman. From its beginnings in the UK, it developed its strong global brand awareness through its global expansion via international breweries, localized brewpubs and strategic partnerships.

These acquisitions present an important step for the Company as it executes against its previously announced strategic initiative to expand its beverage platform into the international markets, The strong global awareness of the BrewDog brand, together with its international brewing infrastructure and experiential pubs, presents an opportunity for growth in the UK, Europe and previously untapped international markets, including the Asia Pacific region. Further, the acquisition of the BrewDog U.S. aligns with our “regional jewel” strategy as BrewDog has built a strong brand in Ohio, which supports and strengthens our presence in the Midwest and provides us with a highly visible presence in Las Vegas, including a flagship brewpub located on a premier stretch of the Las Vegas Strip.

Beverage segment Project 420:

In November 2020, we entered the beverage category with the acquisition of SweetWater Brewing Company, one of the largest independent craft brewers in the U.S. by volume, with the vision of creating a more diversified global lifestyle consumer products company.

This initial acquisition provided us with a foundation to pursue additional acquisitions in the beverage category and scale our business on a national basis. We acquired Alpine Beer Company, Green Flash and Breckenridge Distillery in December 2021, Montauk Brewing Company in November 2022, Craft Acquisition I in October 2023 and Craft Acquisition II in September 2024.

With Craft Acquisition I and Craft Acquisition II, we capitalized on opportunities to acquire additional beverage businesses that consisted of strong brands in decline due to lack of focus and in need of investment in order to promote growth, all at a significantly reduced purchase price. To support the growth of these acquired brands and establish a clear path to profitability, we implemented Project 420, which is a comprehensive plan covering (i) SKU optimization/rationalization; (ii) Geographic rationalization; (iii) Distributor rationalization; and (iv) synergy optimization plan through which we expect to invest in the acquired brands for growth and improve profitability:

SKU optimization/rationalization – In response to the declining growth in the craft beer industry and consolidation of distributors, we are working with our distributors in various markets to streamline our portfolio by eliminating duplicative, lower margin and slower growth products, which has the immediate effect of reducing revenue. However, by eliminating these slower moving and lower margin SKUs, we are able to focus our attention and resources on our higher margin and faster growing SKUs, as well as the introduction of new innovation, which we expect will accelerate our revenue growth in future quarters.

- Geographic rationalization – On a consolidated basis, we generate sales in all states however, our brands are significantly stronger in their home markets. For example, SweetWater is located in Georgia and, as a result, its revenues are stronger in Georgia, Alabama, North Carolina and Florida, while 10 Barrel, which is located in Oregon has stronger revenue in Oregon, Washington, Idaho and Wyoming. In away markets, like Oregon for SweetWater, and Georgia for 10 Barrel, the brands are not as strong inand ~~these~~so ~~“away”~~distribution ~~states~~is de-empathized. Our geographic rationalization works to concentrate our efforts in individual states with our strongest brands in those states. As we reduce the distribution of away markets brands in those states, we are working to increase the distribution and shelf space of home market brands. This initiative is consistent with our Regional Jewel strategy developed in conjunction with the Boston Consulting Group two years ago.

Distributor rationalization – As a result of our various acquisitions in the last five years, we have over 750 distributors and 975 distributor shipping locations. As a result, we are shipping to multiple distributors in the same geography as well as splitting the allocation of local brands between multiple distributors. The goal of the distributor rationalization is to reduce our distributor footprint down to between 450 and 500 distributors, concentrating those distributors’ effort on our brands and SKUs, while minimizing logistical complexities.

- Synergy optimization plan – We previously announced a $33.0 million synergy plan focused on optimizing our production footprint and eliminating redundancies in manufacturing and warehouse assets. By integrating the newly acquired facilities into our existing footprint, we are optimizing capacities, utilization and better absorbing fixed overheads. This in turn is improving our gross margins. As of ~~November~~the 30fiscal quarter ended February 28, ~~2025~~2026, we have ~~achieved~~completed the synergy optimization plan achieving the $2733.20 million oftarget. ~~those~~While ~~savings~~this toinitiative ~~date.~~is Wecomplete, ~~expect~~management toremains ~~complete~~focused ~~the~~on ~~synergy~~disciplined ~~optimization~~cost ~~plan~~management inand continues to advance additional cost‑saving initiatives across the ~~fourth~~business ~~quarter~~to ofdrive ~~fiscal~~further ~~2026~~margin improvement and operating efficiency.

- Brand and business investment – We have been and are continuing to increase our investment in the marketing, promotion and infrastructure of our ~~recently~~core ~~acquired~~ brands in order to re-establish their dominance in their ~~core~~home markets. Our intention is to fund this investment through the cost savings and synergies achieved through Project 420.

It is important to note, however, that there is a lag between the discontinuation of the SKUs and the associated reduction in revenue, which has an immediate effect, and the acceleration of the growth of our existing SKUs and the introduction of new innovation and the associated increase in revenue, which takes time due to retailer resets. We also expect these efforts will lead to improved sales and margins, with benefits realized through lower selling costs, as well as reduced requirements for working capital through inventory reductions and an improvement in our cash conversion cycle.

Political and Economic Environment

Our results of operations may continue to be affected by economic, political, legislative, regulatory, legal actions, global volatility and general market disruption resulting from geopolitical tensions, such as Russia's continued incursion into Ukraine, the ongoing events in the Middle East, including the conflict involving Iran, and political uncertainty in certain countries in Europe. Escalation of hostilities in the Middle East, including involving Iran, could further disrupt global energy markets, fuel prices, transportation networks, and supply chains, particularly in Europe, which may indirectly impact operating costs and consumer demand. Economic conditions, such as recessionary trends, inflation, supply chain disruptions, interest and monetary exchange rates, government fiscal policies, and the recent economic uncertainties resulting from certain changes in U.S. global economic policy, including changes on global trade policies can have a significant effect on operations. More specifically, there are no expected impacts on revenue from the recently enacted U.S. tariffs and foreign enacted retaliatory tariffs (“Tariffs”). From a cost perspective, we believe the recently enacted Tariffs could impact input materials such as aluminum, hops, barley, malt and vape componentry, which are partially imported but we intend to mitigate these impacts to the extent possible.

In addition, U.S. federal regulatory developments regarding cannabis rescheduling represent a significant shift in the political and legislative environment. This regulatory evolution is expected to create a more credible framework for medical cannabis research, clinical development, and compliance, aligning with Tilray’s established global expertise in regulated medical cannabis markets; although, there are no assurances whether such rescheduling will be implemented as and when anticipated. The Company intends to leverage its proven compliance infrastructure, scientific knowledge, and operational scale to expand responsibly in the U.S. market, introducing medical-grade cannabis products in targeted therapeutic formats. While these developments present significant long-term growth opportunities, they also introduce new regulatory complexities and potential risks that we will continue to monitor closely.

Reverse Stock Split

Effective December 2, 2025, we implemented a Reverse Stock Split of our outstanding shares of Common Stock, at a ratio of one-for-ten.

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, see Note 14 (Stockholder’s equity) for additional details. 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.

Results of Operations

Our consolidated results, in thousands , except for per share data, are as follows:

	For the three months ended												For the ~~six~~nine months ended
	November 30,			November 30,			Change			% Change			November 30,			November 30,			Change			% Change
	February 28,			February 28,			Change			% Change			February 28,			February 28,			Change			% Change
(in thousands of U.S. dollars)	~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025						~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025
Net revenue	$	~~217~~206,~~507~~732		$	~~210~~185,~~950~~780		$	620,~~557~~952			311	%	$	~~427~~633,~~008~~740		$	~~410~~596,~~994~~774		$	1636,~~014~~966			46	%
Cost of goods sold		~~160~~151,~~010~~778			~~149~~133,~~730~~769			1018,~~280~~009			713	%		~~312~~463,~~042~~820			~~290~~423,~~068~~837			2139,~~974~~983			89	%
Gross profit		5754,~~497~~954			6152,~~220~~011			(32,~~723~~943	)		(6	)%		~~114~~169,~~966~~920			~~120~~172,~~926~~937			(53,~~960~~017	)		(52	)%
Operating expenses:
General and administrative		5150,~~175~~228			4539,~~997~~246			510,~~178~~982			1128	%		92142,~~228~~456			90129,~~110~~356			213,~~118~~100			210	%
Selling		1110,~~781~~617			1613,~~162~~905			(43,~~381~~288	)		(2724	)%		2435,~~704~~321			2741,~~852~~757			(36,~~148~~436	)		(1115	)%
Amortization		45,~~358~~106			2223,~~927~~182			(18,~~569~~076	)		(8178	)%		813,~~287~~393			4467,~~731~~913			(3654,~~444~~520	)		(8180	)%
Marketing and promotion		98,~~981~~692			96,~~720~~793			~~261~~1,899			328	%		2028,~~136~~828			2128,~~286~~079			~~(1,150~~749	)		(53	)%
Research and development		7862			6085			18(23	)		30(27	)%		~~119~~181			~~165~~250			(4669	)		(28	)%
Change in fair value of contingent consideration		—			—			—			NM			(15,000	)		—			(15,000	)		NM
Litigation costs, net of recoveries		869			901			(32	)		(4	)%		1,876			2,496			(620	)		(25	)%
Impairment of intangible assets and goodwill		—			699,235			(699,235	)		(100	)%		—			699,235			(699,235	)		(100	)%
Restructuring costs		965			6,869			(5,904	)		(86	)%		1,834			11,116			(9,282	)		(84	)%
Other than temporary change in fair value of convertible notes receivable		—			20,000			(20,000	)		(100	)%		—			20,000			(20,000	)		(100	)%
Transaction costs (income), net		569			802			(233	)		(29	)%		969			1,958			(989	)		(51	)%
Litigation costs, net of recoveries		621			2,758			(2,137	)		(77	)%		2,497			5,254			(2,757	)		(52	)%
Total operating expenses		79,776			103,438			(23,662	)		(23	)%		135,153			199,714			(64,561	)		(32	)%
Restructuring costs		4,087			6,133			(2,046	)		(33	)%		5,921			17,249			(11,328	)		(66	)%
Operating loss		(22,279	)		(42,218	)		19,939			(47	)%		(20,187	)		(78,788	)		58,601			(74	)%
Transaction costs (income), net		1,927			605			1,322			219	%		2,896			2,563			333			13	%
Interest expense, net		(5,374	)		(7,766	)		2,392			(31	)%		(12,070	)		(17,608	)		5,538			(31	)%
Total operating expenses		81,340			811,942			(730,602	)		(90	)%		216,493			1,011,656			(795,163	)		(79	)%
Non-operating (expense) income, net		(12,310	)		(33,255	)		20,945			(63	)%		(8,478	)		(20,609	)		12,131			(59	)%
Operating loss		(26,386	)		(759,931	)		733,545			(97	)%		(46,573	)		(838,719	)		792,146			(94	)%
Loss before income taxes		(39,963	)		(83,239	)		43,276			(52	)%		(40,735	)		(117,005	)		76,270			(65	)%
Interest expense, net		(4,965	)		(8,378	)		3,413			(41	)%		(17,035	)		(25,986	)		8,951			(34	)%
Income tax expense (recovery), net		3,546			2,036			1,510			74	%		1,261			2,922			(1,661	)		(57	)%
Non-operating (expense) income, net		8,092			(24,022	)		32,114			(134	)%		(386	)		(44,631	)		44,245			(99	)%
Net loss	$	(43,509	)	$	(85,275	)	$	41,766			(49	)%	$	(41,996	)	$	(119,927	)	$	77,931			(65	)%
Loss before income taxes		(23,259	)		(792,331	)		769,072			(97	)%		(63,994	)		(909,336	)		845,342			(93	)%
Income tax expense (recovery), net		1,974			1,203			771			64	%		3,235			4,125			(890	)		(22	)%
Net loss	$	(25,233	)	$	(793,534	)	$	768,301			(97	)%	$	(67,229	)	$	(913,461	)	$	846,232			(93	)%

Use of Non-GAAP Measures

Throughout this Management's Discussion and Analysis of Financial Condition and Results of Operations in this Quarterly Report on Form 10-Q, we discuss non-GAAP financial measures, including references to:

●

adjusted gross profit (excluding purchase price allocation (“PPA”) step up) consolidated and for each reporting segment (Cannabis, Beverage, Distribution and Wellness),

●

adjusted gross margin (excluding PPA step up) consolidated and for each reporting segment (Cannabis, Beverage, Distribution and Wellness),

●

adjusted EBITDA,

● cash, restricted cash and marketable securities, and

●

constant currency presentation of net revenue (by segment and consolidated).

These non-GAAP financial measures should be considered in addition to, and not in lieu of, the financial measures calculated and presented in accordance with generally accepted accounting principles in the United States of America, (“GAAP”). These financial measures, which may be different than similarly titled financial measures used by other companies, are presented to help investors'’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. Please see “Reconciliation of Non-GAAP Financial Measures to GAAP Measures” below for reconciliation of such non-GAAP financial measures to the most directly comparable GAAP financial measures, as well as a discussion of our adjusted gross margin, adjusted gross profit and adjusted EBITDA measures and the calculation of such measures.

Constant Currency Presentation

We believe that this financial measure provides useful information to investors because it eliminates the effect that foreign currency exchange rate fluctuations may have on period-to-period comparability given the volatility in foreign currency exchange markets and therefore, provides greater transparency to the underlying performance of our consolidated net sales. To present this information for historical periods, current period net sales for entities reporting in currencies other than the U.S. Dollar are translated into U.S. Dollars at the average monthly exchange rate in effect during the corresponding period of the prior fiscal year rather than at the actual average monthly exchange rate in effect during the current period of the current fiscal year. As a result, the foreign currency impact is equal to the current year results in local currencies multiplied by the change in average foreign currency exchange rate between the current fiscal period and the corresponding period of the prior fiscal year.

Cash, restricted cash and Marketable Securities

The Company combines the Cash and cash equivalent financial statement line item, the restricted cash financial statement line and the Marketable securities financial statement line item as an aggregate total as reconciled in the liquidity and capital resource section below. The Company’s management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its short-term liquidity position by combining these ~~two~~three GAAP metrics.

Operating Metrics and Non-GAAP Measures

We use the operating metrics and non-GAAP measures set forth in the table below to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. Other companies, including companies in our industry, may calculate operating metrics and non-GAAP measures with similar names differently which may reduce their usefulness as comparative measures. Certain variances are labeled as not meaningful (“NM”) throughout management's discussion and analysis.

	For the three months ended						For the ~~six~~nine months ended
	November 30,			November 30,			November 30,			November 30,
	February 28,			February 28,			February 28,			February 28,
(in thousands of U.S. dollars)	~~2025~~2026			~~2024~~2025			~~2025~~2026			~~2024~~2025
Net beverage revenue	$	5042,~~083~~558		$	6355,~~081~~921		$	~~105~~148,~~822~~380		$	~~119~~174,~~053~~974
Net cannabis revenue		6764,~~532~~828			6554,~~652~~274			~~132~~196,~~043~~871			~~126~~181,~~901~~175
Distribution revenue		8582,~~316~~963			6761,~~611~~493			~~159~~242,~~323~~286			~~135~~197,~~682~~175
Wellness revenue		1416,~~576~~383			14,~~606~~092			2946,~~820~~203			2943,~~358~~450
Beverage costs		3428,~~351~~977			3735,~~925~~986			6897,~~764~~741			70106,~~975~~961
Cannabis costs		4138,~~398~~858			4232,~~475~~275			82121,~~639~~497			79111,~~529~~804
Distribution costs		7472,~~334~~951			5955,~~207~~936			~~140~~213,~~342~~293			~~119~~175,~~345~~281
Wellness costs		910,~~927~~992			109,~~123~~572			2031,~~297~~289			2029,~~219~~791
Adjusted gross profit (excluding PPA step-up) (1)		5754,~~497~~954			6252,~~596~~070			~~114~~169,~~966~~920			~~122~~174,~~477~~547
Beverage adjusted gross margin (excluding PPA step-up) (1)		3132	%		4236	%		3534	%		4240	%
Cannabis adjusted gross margin (excluding PPA step-up) (1)		3940	%		3541	%		3738	%		3738	%
Distribution gross margin		1312	%		129	%		12	%		1211	%
Wellness gross margin		3233	%		3132	%		32	%		31	%
Adjusted EBITDA (1)	$	810,~~365~~715		$	9,~~017~~040		$	1829,~~546~~261		$	1827,~~351~~391
Cash and marketable securities (1) as at the period ended:		291,551			252,249			291,551			252,249
Cash, restricted cash and marketable securities (1) as at the period ended:		264,817			248,414			264,817			248,414
Working capital as at the period ended:	$	~~470~~461,~~002~~218		$	~~428~~424,~~815~~115		$	~~470~~461,~~002~~218		$	~~428~~424,~~815~~115

(1) Adjusted EBITDA, adjusted gross profit (excluding PPA step-up) and adjusted gross margin (excluding PPA step-up) for each of our segments, and cash, restricted cash and marketable securities are non-GAAP financial measures. See “Use of Non-GAAP Measures” above for a discussion of these Non-GAAP measures and “Reconciliation of Non-GAAP Financial Measures to GAAP Measures” below for a reconciliation of these Non-GAAP Measures to our most comparable GAAP measure and the discussion above captioned “Cash and Marketable Securities.”

Segment Reporting

For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and ~~November~~February 3028, ~~2024~~2025, respectively, our reporting segments net revenue was comprised of net revenues from our beverage, cannabis, distribution, and wellness operations as follows:

For the three months ended

For the ~~six~~nine months ended

November 30,

Change

% Change

November 30,

Change

% Change

February 28,

Change

% Change

February 28,

Change

% Change

(in thousands of U.S. dollars)

~~2025~~2026

~~2024~~2025

~~2025~~2026 vs. ~~2024~~2025

~~2025~~2026

~~2024~~2025

~~2025~~2026 vs. ~~2024~~2025

Beverage business

5042,~~083~~558

6355,~~081~~921

(1213,~~998~~363

)

(2124

~~105~~148,~~822~~380

~~119~~174,~~053~~974

(1326,~~231~~594

)

(1115

Cannabis business

6764,~~532~~828

6554,~~652~~274

110,~~880~~554

319

~~132~~196,~~043~~871

~~126~~181,~~901~~175

515,~~142~~696

Distribution business

8582,~~316~~963

6761,~~611~~493

1721,~~705~~470

2635

~~159~~242,~~323~~286

~~135~~197,~~682~~175

2345,~~641~~111

1723

Wellness business

1416,~~576~~383

14,~~606~~092

~~(30~~2,291

)

(016

2946,~~820~~203

2943,~~358~~450

~~462~~2,753

Total net revenue

~~217~~206,~~507~~732

~~210~~185,~~950~~780

620,~~557~~952

311

~~427~~633,~~008~~740

~~410~~596,~~994~~774

1636,~~014~~966

For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and ~~November~~February 3028, ~~2024~~2025, respectively, our reporting segment net revenue on a constant currency(1) basis was as follows:

For the three months ended

For the ~~six~~nine months ended

as reported in constant currency

November 30,

Change

% Change

November 30,

Change

% Change

February 28,

Change

% Change

February 28,

Change

% Change

(in thousands of U.S. dollars)

~~2025~~2026

~~2024~~2025

~~2025~~2026 vs. ~~2024~~2025

~~2025~~2026

~~2024~~2025

~~2025~~2026 vs. ~~2024~~2025

Beverage business

5042,~~083~~558

6355,~~081~~921

(1213,~~998~~363

)

(2124

~~105~~148,~~822~~380

~~119~~174,~~053~~974

(1326,~~231~~594

)

(1115

Cannabis business

6760,~~486~~257

6554,~~652~~274

15,~~834~~983

311

~~131~~191,~~535~~792

~~126~~181,~~901~~175

410,~~634~~617

Distribution business

7973,~~961~~969

6761,~~611~~493

12,~~350~~476

1820

~~149~~223,~~667~~636

~~135~~197,~~682~~175

1326,~~985~~461

1013

Wellness business

1416,~~734~~051

14,~~606~~092

~~128~~1,959

114

3046,~~015~~066

2943,~~358~~450

~~657~~2,616

Total net revenue

~~212~~192,~~264~~835

~~210~~185,~~950~~780

17,~~314~~055

~~417~~609,~~039~~874

~~410~~596,~~994~~774

613,~~045~~100

~~For~~(1) ~~the~~The ~~three~~constant ~~and~~currency ~~six~~presentation ~~months~~of ~~ended~~our ~~November~~net ~~30,~~revenue ~~2025 and~~based ~~November~~on ~~30,~~reporting ~~2024,~~segment ~~respectively, our~~is ~~geographic~~a ~~net~~non-GAAP ~~revenue~~financial ~~was as~~measure. ~~follows:~~See “Use of Non-GAAP Measures –Constant Currency Presentation” above for a discussion of these Non-GAAP Measures.

	For the three months ended										For the six months ended
	November 30,		November 30,		Change			% Change			November 30,		November 30,		Change			% Change
(in thousands of U.S. dollars)	2025		2024		2025 vs. 2024						2025		2024		2025 vs. 2024
USA	$	57,838	$	71,753	$	(13,915	)		(19	)%	$	121,799	$	135,633	$	(13,834	)		(10	)%
Canada		54,173		56,720		(2,547	)		(4	)%		112,340		112,625		(285	)		(0	)%
EMEA		103,155		79,254		23,901			30	%		188,408		156,926		31,482			20	%
Rest of World		2,341		3,223		(882	)		(27	)%		4,461		5,810		(1,349	)		(23	)%
Total net revenue	$	217,507	$	210,950	$	6,557			3	%	$	427,008	$	410,994	$	16,014			4	%

For the three and nine months ended February 28, 2026 and February 28, 2025, respectively, our geographic net revenue was as follows:

For the three and six months ended November 30, 2025 and November 30, 2024, respectively, our geographic net revenue on a constant currency(1) basis was as follows:

	For the three months ended										For the nine months ended
	February 28,		February 28,		Change			% Change			February 28,		February 28,		Change			% Change
(in thousands of U.S. dollars)	2026		2025		2026 vs. 2025						2026		2025		2026 vs. 2025
USA	$	51,683	$	64,420	$	(12,737	)		(20	)%	$	173,482	$	200,053	$	(26,571	)		(13	)%
Canada		48,221		45,930		2,291			5	%		160,561		158,555		2,006			1	%
EMEA		104,955		72,386		32,569			45	%		293,363		229,312		64,051			28	%
Rest of World		1,873		3,044		(1,171	)		(38	)%		6,334		8,854		(2,520	)		(28	)%
Total net revenue	$	206,732	$	185,780	$	20,952			11	%	$	633,740	$	596,774	$	36,966			6	%

	For the three months ended										For the six months ended
	as reported in constant currency										as reported in constant currency
	November 30,		November 30,		Change			% Change			November 30,		November 30,		Change			% Change
(in thousands of U.S. dollars)	2025		2024		2025 vs. 2024						2025		2024		2025 vs. 2024
USA	$	57,838	$	71,753		(13,915	)		(19	)%	$	121,799	$	135,633		(13,834	)		(10	)%
Canada		55,413		56,720		(1,307	)		(2	)%		113,849		112,625		1,224			1	%
EMEA		96,391		79,254		17,137			22	%		176,399		156,926		19,473			12	%
Rest of World		2,622		3,223		(601	)		(19	)%		4,992		5,810		(818	)		(14	)%
Total net revenue	$	212,264	$	210,950	$	1,314			1	%	$	417,039	$	410,994	$	6,045			1	%

For the three and nine months ended February 28, 2026 and February 28, 2025, respectively, our geographic net revenue on a constant currency⁽¹⁾ basis was as follows:

As of November 30, 2025 and May 31, 2025, respectively, our geographic capital assets were as follows:

	For the three months ended										For the nine months ended
	as reported in constant currency										as reported in constant currency
	February 28,		February 28,		Change			% Change			February 28,		February 28,		Change			% Change
(in thousands of U.S. dollars)	2026		2025		2026 vs. 2025						2026		2025		2026 vs. 2025
USA	$	51,683	$	64,420		(12,737	)		(20	)%	$	173,482	$	200,053		(26,571	)		(13	)%
Canada		46,018		45,930		88			0	%		159,867		158,555		1,312			1	%
EMEA		92,938		72,386		20,552			28	%		269,337		229,312		40,025			17	%
Rest of World		2,196		3,044		(848	)		(28	)%		7,188		8,854		(1,666	)		(19	)%
Total net revenue	$	192,835	$	185,780	$	7,055			4	%	$	609,874	$	596,774	$	13,100			2	%

	November 30,		May 31,		Change			% Change
(in thousands of U.S. dollars)	2025		2025		2025 vs. 2024
USA	$	193,897	$	200,003	$	(6,106	)		(3	)%
Canada		253,515		267,458		(13,943	)		(5	)%
EMEA		98,446		97,371		1,075			1	%
Rest of World		4,243		3,601		642			18	%
Total capital assets	$	550,101	$	568,433	$	(18,332	)		(3	)%

(1)

The constant currency presentation of our net revenue based on geographic segment is a non-GAAP financial measure. See “Use of Non-GAAP Measures –Constant Currency Presentation” above for a discussion of these Non-GAAP Measures.

As of February 28, 2026 and May 31, 2025, respectively, our geographic capital assets were as follows:

	February 28,		May 31,		Change			% Change
(in thousands of U.S. dollars)	2026		2025		2026 vs. 2025
USA	$	188,500	$	200,003	$	(11,503	)		(6	)%
Canada		251,645		267,458		(15,813	)		(6	)%
EMEA		98,571		97,371		1,200			1	%
Rest of World		4,292		3,601		691			19	%
Total capital assets	$	543,008	$	568,433	$	(25,425	)		(4	)%

Beverage revenue

Net revenue from our Beverage segment decreased to $5042.16 million and to $~~105~~148.84 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to revenue of $6355.19 million and $~~119~~175.10 million for the prior year periods. The decline ~~in revenue~~ was primarily ~~driven~~attributable byto continued ~~category~~industry-wide challenges across ~~within~~ the craft beer, ~~segment~~ spirits, and brewpub categories and broader competitive pressures, which resulted in lower volumes sold. Additionally, ~~our~~the ~~portfolio~~decline ~~optimization~~was ~~efforts~~driven ~~under~~in ~~Project~~part ~~420~~by margin‑focused actions, which ~~include~~reduced ~~SKU~~net ~~rationalization~~revenue by approximately $3.0 million and ~~margin-focused~~$13.6 million ~~initiatives~~during the three and nine month periods, ~~contributed~~respectively. toLastly, the ~~year~~HD-~~over-year~~D9 ~~decrease~~category was negatively impacted by U.S. federal legislation that was recently enacted which will restrict the future production and sale of our HD‑D9 beverages and reduced net revenue by approximately $1.0 million during the three and nine month periods, respectively.

For the ~~six~~three ~~month~~and ~~period~~nine months ended ~~November~~February 3028, ~~2025~~2026, these impacts were partially offset by the inclusion of sales from Craft Acquisition II, effective September 1, 2024, which were not reflected in the full comparative ~~prior-year~~period ~~comparative~~and would have increased the nine month revenue for the period ended February 28, 2025 by approximately $13.6 million.

Cannabis revenue

For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and ~~November~~February 3028, ~~2024~~2025, respectively, cannabis net revenue based on market channel was as follows:

	For the three months ended												For the ~~six~~nine months ended
	November 30,			November 30,			Change			% Change			November 30,			November 30,			Change			% Change
	February 28,			February 28,			Change			% Change			February 28,			February 28,			Change			% Change
(in thousands of US dollars)	~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025						~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025
Revenue from Canadian medical cannabis	$	65,~~234~~979		$	65,~~673~~839		$	~~(439~~140	)		(72	)%	$	1218,~~380~~359		$	1218,~~934~~773		$	(~~554~~414	)		(42	)%
Revenue from Canadian adult-use cannabis		6252,~~448~~570			5949,~~077~~315			3,~~371~~255			67	%		~~126~~179,~~515~~085			~~116~~165,~~312~~627			1013,~~203~~458			98	%
Revenue from wholesale cannabis		1,~~346~~165			63,~~593~~893			(52,~~247~~728	)		(8070	)%		56,~~501~~666			1215,~~100~~993			(69,~~599~~327	)		(5558	)%
Revenue from international cannabis		2024,~~180~~121			1413,~~865~~935			510,~~315~~186			3673	%		3357,~~547~~668			2740,~~056~~991			616,~~491~~677			2441	%
Total cannabis revenue		9083,~~208~~835			8772,~~208~~982			310,~~000~~853			315	%		~~177~~261,~~943~~778			~~168~~241,~~402~~384			920,~~541~~394			68	%
Excise taxes		(2219,~~676~~007	)		(2118,~~556~~708	)		(~~1,120~~299	)		52	%		(4564,~~900~~907	)		(4160,~~501~~209	)		(4,~~399~~698	)		118	%
Total cannabis net revenue	$	6764,~~532~~828		$	6554,~~652~~274		$	110,~~880~~554			319	%	$	~~132~~196,~~043~~871		$	~~126~~181,~~901~~175		$	515,~~142~~696			49	%

For the three months ended

For the ~~six~~nine months ended

as reported in constant currency

November 30,

Change

% Change

November 30,

Change

% Change

February 28,

Change

% Change

February 28,

Change

% Change

(in thousands of US dollars)

~~2025~~2026

~~2024~~2025

~~2025~~2026 vs. ~~2024~~2025

~~2025~~2026

~~2024~~2025

~~2025~~2026 vs. ~~2024~~2025

Revenue from Canadian medical cannabis

65,~~380~~706

65,~~673~~839

(~~293~~133

)

(42

1218,~~554~~260

1218,~~934~~773

(~~380~~513

)

Revenue from Canadian adult-use cannabis

6350,~~877~~170

5949,~~077~~315

~~4,800~~855

~~128~~178,~~236~~406

~~116~~165,~~312~~627

1112,~~924~~779

108

Revenue from wholesale cannabis

1,~~373~~112

63,~~593~~893

(52,~~220~~781

)

(7971

56,~~546~~658

1215,~~100~~993

(69,~~554~~335

)

(5458

Revenue from international cannabis

1921,~~053~~410

1413,~~865~~935

47,~~188~~475

2854

3153,~~727~~137

2740,~~056~~991

412,~~671~~146

1730

Total cannabis revenue

9078,~~683~~398

8772,~~208~~982

35,~~475~~416

~~178~~256,~~063~~461

~~168~~241,~~402~~384

915,~~661~~077

Excise taxes

(2318,~~197~~141

)

(2118,~~556~~708

)

~~(1,641~~567

)

8(3

(4664,~~528~~669

)

(4160,~~501~~209

)

(54,~~027~~460

)

127

Total cannabis net revenue

6760,~~486~~257

6554,~~652~~274

15,~~834~~983

311

~~131~~191,~~535~~792

~~126~~181,~~901~~175

410,~~634~~617

(1)

The constant currency presentation of our Cannabis revenue based on market channel is a non-GAAP financial measure. See “Use of Non-GAAP Measures –Constant Currency Presentation” above for a discussion of these Non-GAAP Measures.

Revenue from Canadian medical cannabis: Gross revenue from Canadian medical cannabis ~~decreased~~increased to $6.20 million and decreased to $1218.4 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 compared to gross revenue of $65.78 million and $1218.98 million for the prior year periods, respectively. On a constant currency basis, gross revenue from Canadian medical cannabis decreased to $65.47 million and to $1218.63 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, respectively. The decrease in gross revenue from medical cannabis, on a constant currency basis, was primarily driven by uninsured patient attrition to the adult-use recreational market, which was partially offset by new insured patient acquisition.

Revenue from Canadian adult-use cannabis: During the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, our gross revenue from Canadian adult-use cannabis increased to $6252.46 million and to $~~126~~179.51 million, compared to gross revenue of $5949.13 million and $~~116~~165.36 million for the prior year periods, respectively. On a constant currency basis, our gross revenue from Canadian adult-use cannabis increased to $6350.92 million and increased to $~~128~~178.24 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, respectively. The currency adjusted increase in gross adult-‑use revenue for the three month period was primarily ~~attributed~~ todriven ~~sales~~by ~~growth~~a in$2.7 ~~our~~million ~~flower~~increase ~~and~~in ~~non-infused~~the traditional pre-‑roll ~~categories~~category, ~~where~~reflecting wethe ~~have~~successful ~~begun~~launch of innovation SKUs, including Good Supply Double Dutchies. This growth was partially offset by a $2.1 million decline in the whole flower category, primarily due to ~~see~~the ~~positive~~commencement ~~results~~of ~~from~~strain rotation within our ~~continued~~cultivation ~~innovation~~program, ~~and~~which ~~enhanced~~temporarily ~~cultivation~~constrained ~~capacity~~supply. ~~Additionally~~In addition, wecertain ~~have~~inventory ~~started~~ was redirected to ~~re-enter~~international ~~price-compressed~~markets, ~~categories~~which ~~that~~would ~~were~~otherwise ~~previously~~have ~~margin~~generated ~~prohibitive~~approximately ~~but~~$0.9 ~~are~~million ~~now~~of ~~generating~~revenue ~~positive~~in the Canadian market. For the nine month period, the currency adjusted increase in gross ~~margins~~adult‑use ~~due~~revenue was predominantly attributable to ~~our~~ ~~ongoing~~a ~~cost~~$7.3 ~~savings~~million ~~initiatives~~increase in traditional pre‑rolls, driven by the aforementioned product innovations, and a $1.7 ~~Lastly~~million increase in whole flower sales, weas ~~have~~the strain rotation did not begin until our third quarter. Notably, the Company has continued to invest in ~~our~~its cultivation footprint, including the decision to restart cultivation inat ~~our~~its Quebec facility, to support ~~the~~ growing demand in both the Canadian and international markets. Given the higher ~~margin~~margins ~~that~~generally ~~can~~realized ~~be earned~~ on international cannabis sales, wethe Company may, when advantageous ~~to do so~~, continue to ~~redirect~~allocate ~~inventories~~inventory to international markets, which ~~may~~could negatively impact Canadian adult-‑use and wholesale cannabis revenue in future periods ~~while~~as wethe ~~scale~~Company upcontinues ~~our~~to scale its infrastructure.

Wholesale cannabis revenue: Gross revenue from wholesale cannabis decreased to $1.32 million and to $56.57 million and for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to gross revenue of $63.69 million and $1216.10 million for the prior year periods respectively. On a constant currency basis, gross revenue from wholesale cannabis decreased to $1.41 million and ~~decreased~~ to $56.57 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, respectively. Due to the transition by many licensed producers in the Canadian market to asset-light business models, the Canadian cannabis industry has experienced a reduction in excess inventory resulting in price increases in the B2B market. As a result of this shift in market dynamics and demand, we continue to evaluate the market and may opportunistically sell into the wholesale market where it makes sense. Specifically, during the three and ~~six~~nine ~~month~~months ~~periods~~ ended ~~November~~February 3028, ~~2025~~2026, ~~our~~ wholesale cannabis revenue ~~was~~declined ~~lower~~compared ~~than~~to the prior year ~~comparative~~ periods ~~due~~ toas ~~our~~the ~~strategic~~Company ~~decision~~strategically redirected product to ~~channel~~other ~~more~~markets, ofresulting ~~our~~in ~~volume~~a ~~into~~49% ~~the~~and ~~other~~47% ~~markets~~decrease in ~~which~~wholesale wegram ~~participate~~equivalents sold, respectively.

International cannabis revenue: Net revenue from International cannabis increased to $2024.21 million and to $3357.57 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to net revenue of $1413.9 million and $2741.10 million for the prior year periods, respectively. On a constant currency basis, given the strengthening of the Euro against the U.S. Dollar when compared to the prior year quarter, net revenue from international cannabis increased to $1921.14 million and increased to $3153.71 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, respectively. The increase in net revenue from International cannabis markets during the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, was ~~attributed~~primarily attributable to growth in the German medical cannabis market, which increased by $4.0 million and $9.8 million, respectively, the receipt of previously backlogged permits, and ~~expansion~~an ~~into~~enhanced ~~emerging~~supply ~~medical markets~~chain. ~~International~~During ~~cannabis~~the ~~net~~three ~~revenue~~month ~~may~~period, ~~fluctuate~~this ~~from~~growth ~~quarter~~was tofurther ~~quarter~~supported ~~based~~by ~~upon~~a ~~the~~$4.4 ~~timing~~million ofincrease ~~the~~in ~~receipt~~Poland, ofdriven ~~export/import~~by ~~permits~~patient asadoption ~~well~~of asan ~~the~~in‑person ~~timing~~prescription ofmodel, ~~shipments~~and ~~from~~a ~~one~~$1.7 ~~quarter~~million toincrease in the ~~next.~~United ~~Notably,~~Kingdom ~~International~~through ~~cannabis~~our ~~revenue~~targeted inexpansion ~~the~~into ~~first~~emerging ~~fiscal~~markets. ~~quarter~~Despite ~~ended~~increased ~~August~~gram ~~31,~~equivalents ~~2025~~sold, ~~was~~international ~~temporarily~~cannabis ~~reduced~~revenue ~~due~~was tonegatively ~~permit‑related~~impacted ~~delays.~~by Asprice ~~these~~compression ~~delays~~of ~~were~~approximately ~~resolved,~~$7.0 ~~revenue~~million ~~levels~~and in$16.0 million for the ~~second~~three ~~fiscal~~and ~~quarter~~nine months ended ~~November~~February 3028, ~~2025~~2026, ~~which~~respectively. ~~were~~Notwithstanding ~~consistent~~this ~~with~~pricing ~~those~~pressure, ~~achieved~~international incannabis ~~the~~sales ~~fourth~~continue ~~fiscal~~to ~~quarter~~generate ~~ended~~higher ~~May~~margins ~~31,~~than ~~2025,~~Canadian ofcannabis ~~the prior fiscal year~~sales, ~~are~~and ~~more~~the ~~indicative~~Company ofremains ~~our~~focused ~~expected~~on ~~ongoing~~optimizing ~~run~~its ~~rate~~product ~~than~~mix ~~the~~and ~~lower~~geographic ~~revenue~~allocation ~~realized~~to inmaximize ~~the first quarter~~profitability.

Distribution revenue

Net revenue from our Distribution segment increased to $8583.30 million and increased to $~~159~~242.3 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to revenue of $6761.65 million and $~~135~~197.72 million for the prior year periods, respectively. On a constant currency basis, given the change in the Euro and Argentine Peso against the U.S. Dollar in the fiscal quarter, revenue from Distribution increased to $8074.0 million and to $~~149~~223.76 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, respectively. The increase in ~~distribution~~Distribution revenue infor the three month period was primarily driven by a focus on competitive pricing, ~~prioritizing high~~as evidenced by a 13% increase in average selling price, and a 7% increase in units sold, reflecting greater emphasis on higher‑velocity SKUs, ~~and~~as ~~the~~well as favorable foreign exchange impacts. ofThe increase in Distribution revenue for the nine month period was primarily attributable to a 4% increase in average selling price, an 11% increase in volume, and favorable foreign exchange impacts.

Wellness revenue

Our Wellness segment net revenue increased ~~remained consistent at~~to $1416.64 million and ~~increased~~ to $2946.82 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 compared to $14.61 million and $2943.45 million from the prior year periods, respectively. On a constant currency basis for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, Wellness segment net revenue increased to $1416.71 million and to $3046.01 million, respectively. The increase in revenue was driven by our strategic focus on value-add innovations, including high protein super-seeds, better-for-you breakfast products, better-for-you snacking, and the continued success of our Hi-Ball clean energy drinks which contributed approximately $0.5 ~~Additionally~~million and $2.6 million of incremental revenue during the three and nine months, ~~there~~respectively. ~~was~~In ~~continued~~addition, ~~growth~~the ~~experienced~~acquisition inof Blue Sky Hemp Venture’s customer list contributed to the ~~ingredient~~growth of our ingredients sales channel as aby ~~result~~approximately $1.1 million and $3.0 million of ~~new~~incremental ~~customer~~revenue ~~acquisitions~~during the three and nine month periods, respectively. ~~These~~ ~~trends were~~The ~~partially~~remaining ~~offset~~Wellness portfolio contributed approximately $0.6 million of revenue growth during the three month period, reflecting improved demand across certain product lines. However, for the nine month period, revenue from the remaining sales channels declined by ~~challenges~~approximately $2.1 million, primarily due to a shift in one of our supply agreements within the ~~club~~Club retailer channel,. ~~which~~We we are actively addressing these challenges through targeted initiatives aimed at improving distribution, assortment optimization, and promotional execution across our Club and Retail sales channels.

Gross profit, gross margin and adjusted gross margin⁽¹⁾ for our reporting segments

For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and ~~November~~February 3028, ~~2024~~2025, respectively, our gross profit and gross margin were as follows:

	For the three months ended												For the ~~six~~nine months ended
(in thousands of U.S. dollars)	~~November~~February 3028,			~~November~~February 3028,			Change			% Change			~~November~~February 3028,			~~November~~February 3028,			Change			% Change
Beverage	~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025						~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025
Net revenue	$	5042,~~083~~558		$	6355,~~081~~921		$	(1213,~~998~~363	)		(2124	)%	$	~~105~~148,~~822~~380		$	~~119~~174,~~053~~974		$	(1326,~~231~~594	)		(1115	)%
Cost of goods sold		3428,~~351~~977			3735,~~925~~986			(37,~~574~~009	)		(919	)%		6897,~~764~~741			70106,~~975~~961			(29,~~211~~220	)		(39	)%
Gross profit		1513,~~732~~581			2519,~~156~~935			(96,~~424~~354	)		(3732	)%		3750,~~058~~639			4868,~~078~~013			(1117,~~020~~374	)		(2326	)%
Gross margin		3132	%		4036	%		(94	)%		(2311	)%		3534	%		4039	%		(5	)%		(13	)%
Purchase price accounting step-up		—			~~1,376~~59			(~~1,376~~59	)		(100	)%		—			1,~~551~~610			(1,~~551~~610	)		(100	)%
Adjusted gross profit (1)		1513,~~732~~581			2619,~~532~~994			(106,~~800~~413	)		(4132	)%		3750,~~058~~639			4969,~~629~~623			(1218,~~571~~984	)		(2527	)%
Adjusted gross margin (1)		3132	%		4236	%		(114	)%		(2611	)%		3534	%		4240	%		(76	%)%		(1715	%)%
Cannabis
Net revenue		6764,~~532~~828			6554,~~652~~274			110,~~880~~554			319	%		~~132~~196,~~043~~871			~~126~~181,~~901~~175			515,~~142~~696			49	%
Cost of goods sold		4138,~~398~~858			4232,~~475~~275			(16,~~077~~583	)		(320	)%		82121,~~639~~497			79111,~~529~~804			39,~~110~~693			49	%
Gross profit		2625,~~134~~970			2321,~~177~~999			23,~~957~~971			1318	%		4975,~~404~~374			4769,~~372~~371			26,~~032~~003			49	%
Gross margin		3940	%		3541	%		4(1	)%		11(2	)%		3738	%		3738	%		0	%		0	%
Distribution
Net revenue		8582,~~316~~963			6761,~~611~~493			1721,~~705~~470			2635	%		~~159~~242,~~323~~286			~~135~~197,~~682~~175			2345,~~641~~111			1723	%
Cost of goods sold		7472,~~334~~951			5955,~~207~~936			1517,~~127~~015			2630	%		~~140~~213,~~342~~293			~~119~~175,~~345~~281			2038,~~997~~012			1822	%
Gross profit		10,~~982~~012			85,~~404~~557			24,~~578~~455			3180	%		1828,~~981~~993			1621,~~337~~894			27,~~644~~099			1632	%
Gross margin		1312	%		129	%		13	%		833	%		12	%		1211	%		01	%		09	%
Wellness
Net revenue		1416,~~576~~383			14,~~606~~092			~~(30~~2,291	)		(016	)%		2946,~~820~~203			2943,~~358~~450			~~462~~2,753			26	%
Cost of goods sold		910,~~927~~992			109,~~123~~572			~~(196~~1,420	)		(215	)%		2031,~~297~~289			2029,~~219~~791			781,498			05	%
Gross profit		45,~~649~~391			4,~~483~~520			~~166~~871			419	%		914,~~523~~914			913,~~139~~659			~~384~~1,255			49	%
Gross margin		3233	%		3132	%		1	%		3	%		32	%		31	%		1	%		3	%
Total
Net revenue		~~217~~206,~~507~~732			~~210~~185,~~950~~780			620,~~557~~952			311	%		~~427~~633,~~008~~740			~~410~~596,~~994~~774			1636,~~014~~966			46	%
Cost of goods sold		~~160~~151,~~010~~778			~~149~~133,~~730~~769			1018,~~280~~009			713	%		~~312~~463,~~042~~820			~~290~~423,~~068~~837			2139,~~974~~983			89	%
Gross profit		5754,~~497~~954			6152,~~220~~011			(32,~~723~~943	)		(6	)%		~~114~~169,~~966~~920			~~120~~172,~~926~~937			(53,~~960~~017	)		(52	)%
Gross margin		2627	%		2928	%		(31	)%		(104	)%		27	%		29	%		(2	)%		(7	)%
Purchase price accounting step-up		—			~~1,376~~59			(~~1,376~~59	)		(100	)%		—			1,~~551~~610			(1,~~551~~610	)		(100	)%
Adjusted gross profit (1)		5754,~~497~~954			6252,~~596~~070			(52,~~099~~884	)		(86	)%		~~114~~169,~~966~~920			~~122~~174,~~477~~547			(74,~~511~~627	)		(63	)%
Adjusted gross margin (1)		2627	%		3028	%		(41	)%		(134	)%		27	%		3029	%		(32	)%		(107	)%

(1) Adjusted gross profit is our Gross profit (adjusted to exclude purchase price accounting valuation step-up) and adjusted gross margin is our Gross margin (adjusted to exclude purchase price accounting valuation step-up) for ~~each~~our beverage segment and on a consolidated basis are non-GAAP financial measures. See “Use of Non-GAAP Measures” above for additional discussion regarding these non-GAAP measures. The Company’s management believes that adjusted gross profit and adjusted gross margin are useful to our management to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. We do not consider adjusted gross profit and adjusted gross margin in isolation or as an alternative to financial measures determined in accordance with GAAP.

Beverage gross margin: For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, our beverage segment generated gross margin of 3132% and 3534%, respectively, which decreased from 4036% and 4039% generated in the prior year periods, respectively. Adjusted gross margin was 3132% and 3534%, which decreased from 4236% and 4240% generated in the prior year periods, respectively. The change in the beverage gross margin and adjusted beverage gross margin for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 was driven by several factors, including our Craft Acquisition II, which historically has operated at a lower gross margin of approximately 25%, declining overhead utilization as our revenue levels have declined, higher input costs and timing delays in realizing the full benefits of our Project 420 cost savings initiatives. Additionally, increased discounting to support sales volume resulted in discounts of 7.2% for the three month period compared to 4.7% in the prior quarter, and 6.6% for the nine month period compared to 4.1% in the prior year period, which negatively impacted margins and was partially offset by reductions in marketing expenditures.

Cannabis gross margin: For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, our cannabis segment generated gross margin of 3940% and 3738%, respectively, which ~~increased~~decreased from 3541% and remained consistent at 3738% generated in the prior year periods, respectively. ~~The~~Although ~~change in~~both cannabis net revenue and gross ~~margin~~profit ~~for~~increased during the three and ~~six~~nine ~~months~~month ~~ended November 30~~periods, ~~2025~~gross ~~was~~margin ~~driven~~remained bylargely aunchanged. ~~higher~~This ~~proportion~~was ofprimarily ~~our~~due ~~sales~~to ~~being~~price ~~generated~~compression ~~from~~in international markets, which ~~has~~ ~~higher~~negatively ~~margins and~~impacted ~~lower~~international ~~participation~~cannabis inrevenue ~~Canadian~~during ~~wholesale~~the ~~markets~~three ~~which~~and ~~generates~~nine ~~lower~~month ~~margins.~~periods ~~These favorable impacts were offset~~ by ~~our~~approximately ~~increased~~$7.0 ~~participation~~million inand ~~lower~~$16.0 ~~margin~~million, ~~product categories in the Canadian adult-use cannabis market~~respectively, asdespite wehaving ~~continue~~increased tothe ~~optimize~~gram ~~our~~equivalents ~~cost structure to eliminate negative margins in price competitive categories~~sold.

Distribution gross margin: For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, our distribution segment generated gross margin of 1312% and 12%, respectively, which increased from 129% and ~~remained consistent at~~ 1211% generated in the prior year periods, respectively,. The ~~which~~increase was ~~attributed~~ primarily attributable to a favorable change in product mix, ~~combined~~as ~~with~~evidenced ~~foreign~~by ~~exchange~~increases ~~rate~~in ~~improvements~~average selling price of approximately 13% and 4% during the three and nine month periods, respectively, as well as initiatives undertaken to reduce input costs.

Wellness gross margin: For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, our wellness segment generated gross margin of 3233% and 32%, respectively, which increased from 3132% and 31% in the prior year periods, respectively,. Gross margin remained relatively consistent period over period as astrategic ~~result~~price ofincreases alargely ~~change~~offset unfavorable changes in ~~product~~sales mix.

Operating expenses

During the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and ~~November~~February 3028, ~~2024~~2025, respectively, the changes in operating expenses were as follows:

	For the three months ended										For the ~~six~~nine months ended
	November 30,		November 30,		Change			% Change			November 30,			November 30,		Change			% Change
	February 28,		February 28,		Change			% Change			February 28,			February 28,		Change			% Change
(in thousands of US dollars)	~~2025~~2026		~~2024~~2025		~~2025~~2026 vs. ~~2024~~2025						~~2025~~2026			~~2024~~2025		~~2025~~2026 vs. ~~2024~~2025
General and administrative	$	5150,~~175~~228	$	4539,~~997~~246	$	510,~~178~~982			1128	%	$	92142,~~228~~456		$	90129,~~110~~356	$	213,~~118~~100			210	%
Selling		1110,~~781~~617		1613,~~162~~905		(43,~~381~~288	)		(2724	)%		2435,~~704~~321			2741,~~852~~757		(36,~~148~~436	)		(1115	)%
Amortization		45,~~358~~106		2223,~~927~~182		(18,~~569~~076	)		(8178	)%		813,~~287~~393			4467,~~731~~913		(3654,~~444~~520	)		(8180	)%
Marketing and promotion		98,~~981~~692		96,~~720~~793		~~261~~1,899			328	%		2028,~~136~~828			2128,~~286~~079		~~(1,150~~749	)		(53	)%
Research and development		7862		6085		18(23	)		30(27	)%		~~119~~181			~~165~~250		(4669	)		(28	)%
Change in fair value of contingent consideration		—		—		—			NM			(15,000	)		—		(15,000	)		NM
Litigation costs, net of recoveries		869		901		(32	)		(4	)%		1,876			2,496		(620	)		(25	)%
Impairment of intangible assets and goodwill		—		699,235		(699,235	)		(100	)%		—			699,235		(699,235	)		(100	)%
Restructuring costs		965		6,869		(5,904	)		(86	)%		1,834			11,116		(9,282	)		(84	)%
Other than temporary change in fair value of convertible notes receivable		—		20,000		(20,000	)		(100	)%		—			20,000		(20,000	)		(100	)%
Transaction costs (income), net		569		802		(233	)		(29	)%		969			1,958		(989	)		(51	)%
Litigation costs, net of recoveries		621		2,758		(2,137	)		(77	)%		2,497			5,254		(2,757	)		(52	)%
Total operating expenses	$	79,776	$	103,438	$	(23,662	)		(23	)%	$	135,153		$	199,714	$	(64,561	)		(32	)%
Restructuring costs		4,087		6,133		(2,046	)		(33	)%		5,921			17,249		(11,328	)		(66	)%
Transaction costs (income), net		1,927		605		1,322			219	%		2,896			2,563		333			13	%
Total operating expenses	$	81,340	$	811,942	$	(730,602	)		(90	)%	$	216,493		$	1,011,656	$	(795,163	)		(79	)%

Operating expenses are comprised of general and administrative, selling, amortization, marketing and promotion, research and development, change in fair value of contingent consideration, impairment of intangible assets and goodwill, other than temporary changes in fair value of convertible notes receivable, litigation costs, net of recoveries, restructuring costs and transaction costs (income), net. For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, operating expenses decreased by $23730.7 6 million and by $64795.62 million to $7981.83 million and $~~135~~216.25 million when compared to $~~103~~811.49 million and $~~199~~1,011.7 million for the prior year periods, respectively. ~~This decrease was~~These decreases were primarily ~~attributed~~attributable to $699.2 million of non‑cash impairments of goodwill and intangible assets and a $20.0 million other‑than‑temporary decrease in the ~~lower amortization~~fair ~~expense~~value of the MedMen convertible note recorded in the prior year quarter, which did not repeat in the current period. In addition, ~~which~~the ~~resulted~~nine month period ended February 28, 2026, had lower ~~from~~amortization expense following the intangible asset ~~reduction~~ impairment recorded during the fiscal quarter ended May 31, 2025, asa ~~well~~$15.0 ~~as,~~million a gain ~~from~~ related to the change in fair value of the Montauk contingent consideration, and, lower toselling aand ~~lesser extent, a reduction in~~ non-‑recurring litigation, ~~restructuring~~ and ~~transaction~~ restructuring costs,. asThese ~~well~~decreases aswere ~~selling~~partially offset by higher general and administrative costs.

General and administrative costs

During the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and ~~November~~February 3028, ~~2024~~2025, respectively, the changes in general and administrative costs when compared to the prior year period were as follows:

	For the three months ended												For the ~~six~~nine months ended
	November 30,			November 30,			Change			% Change			November 30,			November 30,			Change			% Change
	February 28,			February 28,			Change			% Change			February 28,			February 28,			Change			% Change
(in thousands of US dollars)	~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025						~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025
Salaries and wages	$	2421,~~764~~925		$	2221,~~726~~908		$	~~2,038~~17			90	%	$	4668,~~500~~425		$	4466,~~293~~201		$	2,~~207~~224			53	%
Office and general		89,~~284~~916			97,~~458~~385			(12,~~174~~531	)		~~(12~~34	)%		1626,~~981~~897			1826,~~718~~103			~~(1,737~~794	)		(93	)%
Stock-based compensation		1213,~~283~~725			74,~~237~~035			59,~~046~~690			70240	%		1731,~~335~~060			1418,~~154~~189			312,~~181~~871			2271	%
Insurance		21,~~456~~894			32,~~155~~942			(~~699~~1,048	)		(2236	)%		46,~~849~~743			58,~~610~~552			(~~761~~1,809	)		(1421	)%
Professional fees		1,~~034~~090			1,~~126~~352			(92262	)		(819	)%		23,~~252~~342			23,~~304~~656			(52314	)		(29	)%
Gain on sale of capital assets		(~~134~~118	)		(~~505~~202	)		~~371~~84			(7342	)%		(~~375~~493	)		(~~531~~733	)		~~156~~240			(2933	)%
Travel and accommodation		1,~~292~~014			1,~~754~~100			(~~462~~86	)		(268	)%		23,~~604~~618			34,~~247~~347			(~~643~~729	)		(2017	)%
Rent		~~1,196~~782			~~1,046~~726			~~150~~56			148	%		2,~~082~~864			23,~~315~~041			(~~233~~177	)		(106	)%
Total general and administrative costs	$	5150,~~175~~228		$	4539,~~997~~246		$	510,~~178~~982			1128	%	$	92142,~~228~~456		$	90129,~~110~~356		$	213,~~118~~100			210	%

Salaries and wages remained consistent ~~increased by 9%~~ and increased by 53% during the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~ 2026, when compared to the prior year periods~~, respectively~~. ~~The~~Included ~~increase~~in ~~during~~salaries and wages for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, ~~was~~were $0.5 ~~primarily~~million ~~due~~and $2.3 tomillion, ~~the inclusion~~respectively, of ~~employees~~retention ~~from~~payments compared ~~our~~to ~~Craft Acquisition II, which was effective as of September~~ $1,.5 ~~2024~~million and $3.2 ~~therefore,~~million ~~its~~for ~~salaries and wages were not included in~~ the prior year ~~first~~period, ~~quarter and as a result of changes in estimates related to timing of compensation accruals~~respectively. ~~In addition~~Additionally, ~~included in the six month~~ period-over‑period ~~ended November~~variability ~~30, 2025,~~ was ~~$1.8 million~~ ofalso ~~retention~~impacted ~~payments compared~~by tochanges ~~$1.7 million~~ in ~~the~~estimates ~~prior~~related ~~year~~to ~~six~~discretionary ~~month~~compensation ~~period ended November 30, 2024~~accruals.

Office and general ~~decreased~~increased by 1234% and by 93% during the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~ 2026, when compared to the prior year period respectively. The ~~decrease~~increase in the three and nine months ended February 28, 2026 was ~~driven~~primarily bydue ~~our~~to ~~ongoing~~a ~~cost~~$0.7 ~~saving~~million ~~initiatives~~increase ~~despite~~ in bad debt provisions within the distribution business, the inclusion of a full period of costs ~~from~~related ~~our~~to Craft Acquisition II, which was effective ~~as of~~ September 1, 2024 and contributed approximately $0.6 million to the period‑over‑period variance, and the absence of a $0.3 million property tax refund recorded in the prior year quarter.

The Company recognized stock-based compensation expense of $1213.37 million and $1731.31 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to $74.20 million and $1418.2 million for the prior year period respectively. Stock-based compensation expense is ~~based~~primarily ondriven ~~the~~ by time-based vesting schedules and ~~varies~~may ~~according~~vary tobased ~~the~~on assumptions used in ~~the~~valuation and vesting ~~model~~models. ~~During~~The increase during the three and ~~six~~nine ~~months~~month ~~ended~~periods ~~November~~was ~~30,~~primarily ~~2025, stock-based~~due ~~compensation~~to ~~increased as a result of~~ the recognition of ~~expenses~~expense related to ~~the~~ performance-based ~~grants~~awards following the establishment and approval of their performance criteria during the second fiscal quarter. As a result, performance-based awards contributed approximately $6.3 million and $12.1 million of expense during the three and nine month periods, respectively. Stock based compensation expense in the prior year periods was lower primarily due to the cancellation of certain performance-based awards.

Insurance expense decreased by 2236% and ~~decreased~~ by 1421% for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 to $21.59 million and $46.87 million from $3.2.9 million and $58.6 million for the prior year period, respectively due to lower premiums as a result of management’s decision to self-insure a portion of our property and casualty insurance.

Rent expense increased by 148% and decreased by 106% for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 to $10.28 million and $2.19 million compared to $1.0.7 million and $2.3.0 million for the prior year periods, respectively. Rent expense is predominantly comprised of operating lease expenses for our brew pubs and office spaces and varies period-over-period based on lease amortization schedules and common area maintenance costs.

Selling costs

For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company incurred selling costs of $1110.86 million or 5% of net revenue and $2435.73 million or 6% of net revenue as compared to $1613.29 million or 87% of net revenue and $2741.98 million or 7% of net revenue in the prior year period respectively. These costs relate to third-party shipping costs for all segments, in addition to distributor commission incurred by the cannabis segment, Health Canada cannabis fees, and patient acquisition and maintenance costs. The decrease in selling costs for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 iswas primarily driven by lower freight costs in the beverage segment resulting from Project 420 cost‑saving initiatives, which improved freight as a percentage of sales by approximately 90 and 144 basis points for the three and nine month periods, respectively. In addition, lower freight costs ~~incurred~~ in the ~~beverage~~Canadian cannabis segment following contract renegotiations improved freight as a ~~result~~percentage of ~~Project~~sales ~~420 cost~~by ~~saving~~approximately ~~initiatives~~ 180 and 210 basis points for the three and nine month periods, respectively, and were further supported by lower commission rates ~~experienced~~ in the Canadian cannabis sales channels.

Amortization

The Company incurred non-production related amortization charges of $45.41 million and $813.34 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to $2223.92 million and $4467.7 9 million in the prior year periods, respectively, based on depreciable capital and intangible assets useful lives. The decrease in the amortization expense is due to the lower carrying value of intangible assets as a result of the impairment charges recognized during the fiscal year ended May 31, 2025.

Marketing and promotion costs

For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company incurred marketing and promotion costs of $108.07 million and $2028.18 million compared to $96.78 million and $2128.31 million for the prior year periods, respectively and was driven by variability in discretionary marketing spend.

Research and development

Research and development costs were $0.1 million and $0.12 million during the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to $0.1 million and $0.23 million in the prior year periods, respectively. These ~~cost~~costs relate to external expenditures associated with the development of new products.

Change in fair value of contingent consideration

~~The~~A ~~Company~~portion ~~measures~~of ~~contingent~~the total consideration atto ~~fair~~be ~~value classified~~paid asin ~~Level~~connection with the Company’s acquisition 3,of asMontauk ~~discussed~~Brewing inCompany ~~Note~~(“Montauk”) 24was ~~(Financial~~contingent ~~risk~~upon ~~management~~the ~~and~~achievement ~~financial~~by ~~instruments).~~Montauk ~~During~~of ~~the~~certain ~~six~~financial ~~months~~measures ~~ended~~as ~~November~~of 30December 31, 2025,. In the ~~Company~~event ~~recognized~~that Montauk achieved either the pre-determined sales volume target or EBITDA target, then $15.0 million of ~~change in~~contingent ~~the~~consideration ~~fair~~would ~~value~~be ofdeemed ~~contingent~~earned ~~consideration~~and as payable. If both the ~~likelihood~~sales ofvolume ~~achievement~~target ~~decreased~~and tothe EBITDA target were achieved, an additional $3.0% ofmillion would ~~such~~be deemed earned and payable for a total contingent consideration ~~related~~ topayment ~~the~~of ~~Montauk~~$18.0 ~~Brewing acquisition~~million.

For the year ended, May 31, 2025, the Company assessed the estimated value of the contingent consideration liability as $15.0 million, which was estimated to be achieved based on management’s forecast, applying a probability of achievement of 100% for the sales volume target and 0% on the remaining criteria, which was not expected to be achieved as EBITDA targets were not forecasted to be met.

During the three 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, July and August 2025, and the loss of certain national retail programs, management concluded that Montauk no 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 $15.0 million change in fair value of the contingent consideration liability was recorded within the statement of profit and loss and contributed to the Company’s net income generated during the period ended August 31, 2025, despite historically reporting a net loss.

During the three months ended February 28, 2026, the earn-out period concluded and neither financial measure was achieved. Accordingly, no further changes to the fair value of the contingent consideration liability were recognized during the three months ended February 28, 2026 as no contingent consideration obligation was payable.

Impairments

During the fiscal quarter ended February 28, 2026, the Company assessed for indicators of impairment and concluded that there were no indicators and accordingly, no further impairment testing was required and no impairment charges were recognized during the period.

In the prior year period, 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 than not, 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 $570.0 million of cannabis goodwill, $100.0 million of beverage goodwill, $25.0 million of wellness goodwill and $4.2 million of distribution goodwill for the three and nine months ended February 28, 2025. The non-cash impairment charge had no impact on the Company’s compliance with debt covenants, its cash flows or available liquidity.

In the Company’s cannabis goodwill assessment performed during the three and nine months ended February 28, 2025, 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 next 5 years. A 1% increase in the discount rate would result in an additional $285.0 million in impairment, a 1% decrease in the terminal growth rate would result in an additional $210.0 million in impairment, a 5% decrease in the average growth rate would result in an additional $170.0 million in impairment, a 5% decrease in the probability of EU cannabis legalization would result in an additional $80.0 million in impairment and a 5% decrease in the probability of US cannabis legalization would result in an additional $7.0 million 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 performed during the three and nine months ended February 28, 2025, 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. A 1% increase in the discount rate would result in an additional $70.0 million in impairment, a 1% decrease in the terminal growth rate would result in an additional $50.0 million in impairment and a 1% decrease in the average growth rate would result in an additional $40.0 million in impairment.

In the Company’s wellness goodwill assessment performed during the three and nine months ended February 28, 2025, 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. A 1% increase in the discount rate would result in an additional $5.0 million in impairment, a 1% decrease in the terminal growth rate would result in an additional $3.0 million in impairment and a 1% decrease in the average growth rate would result in an additional $2.0 million in impairment.

In the Company’s distribution goodwill assessment performed during the three and nine months ended February 28, 2025, the Company recorded $4.2 million of impairments which brought the remaining distribution goodwill balance to $nil.

Other than temporary write-down of convertible notes receivable

For the three and nine months ended February 28, 2026, the Company no longer held MedMen Convertible Notes, and thus did not recognize any further changes in fair value.

During the three and nine months ended February 28, 2025, the Company recognized an other-than-temporary change in fair value, which resulted in a non-cash expense of $20.0 million and $20.0 million. The MedMen Convertible Note was valued based upon the estimated fair value of the collateral assets net of estimated disposal costs and has been reduced to reflect recent developments in restructuring efforts.

Subsequent to the impairment recorded during the three and nine months ended February 28, 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 Note 8 (Long-term investments). This option was recorded as a Level 3 equity investment measured at fair value by assessing the discounted cash flows of SH Acquisition.

Litigation costs, net of recoveries

For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company recorded $0.96 million and $12.95 million of litigation settlements costs and third-party fees incurred in defending these claims, net of favorable recoveries compared to $02.98 million and $2.5.3 million in the prior year period respectively. The ~~increase~~ decrease is related to period-to-period variability as litigation and settlement costs are non-recurring in nature.

Restructuring costs

In connection with the integration of certain acquisitions and strategic transactions, the Company has incurred restructuring and exit costs in the amount of $14.01 million and $15.89 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to $6.91 million and $1117.12 million for the prior year period respectively. 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 Cannabis segment, during the ~~six~~ nine months ended ~~November~~February 3028, ~~2025~~2026, the Company incurred restructuring~~-related~~ expenses totaling $15.82 million. These charges included $03.7 million associated with the restructuring of the Quebec facility to transition from vegetable cultivation to cannabis cultivation in response to increased global cannabis demand, $01.80 million related to employee termination severance and benefits associated with the reorganization of the Canadian cannabis commercial function, and $0.2 million related to the wind-down of certain non-operating entities. Additionally, the Company recognized $0.13 million related to its Fort Collins, CO partially vacant warehouse ~~recorded~~that ~~under~~was ~~assets~~ previously held of for sale and was divested during the three months ended February 28, 2026. See Note 3 (capital assets).

During the fiscal year ended May 31, 2025, the Company accrued $8.5 million of restructuring charges related to the closure of Hop Valley and other Project 420 initiatives within the Beverage segment, of which $47.6 5 million was recognized in nine ~~the six~~ months ended ~~November~~February 3028, ~~2025 thereby~~2026, thereby reducing the accrual to $31.90 million. In addition, during the three and nine months ended February 28, 2026, the Company incurred $0.7 million of restructuring related expenses associated with the Atwater Brewery, primarily related to the asset being classified as held for sale and additional facility restructuring activities. See Note 3 (Capital Assets).

Transaction (income) costs, net

Transaction (income) costs, net, include non-recurring acquisition related income and expenses, related legal, financial advisor and due diligence cost and expenses and transaction related compensation. For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, transaction (income) costs, ~~decreased~~increased ~~by 29%~~ to $01.69 million and $12.09 million~~, and~~ ~~decreased by~~from ~~51% to~~ $0.86 million and $2.06 million ~~from~~for the prior year periods, respectively. During the three and ~~six~~nine months ended ~~November~~ 30February 28, ~~2024~~2026, ~~respectively~~transaction costs were primarily attributable to $1.2 ~~This~~million ~~decrease~~of ~~was~~legacy HEXO pre-acquisition tax settlements and $0.6 million of due todiligence ~~the~~costs ~~fact~~associated ~~that~~with weongoing ~~incurred~~transactions. ~~higher~~In comparison, transaction costs in during the prior year nine month period inwere ~~connection~~primarily ~~with~~comprised of $1.1 million of costs related to the completion of Craft Acquisition II.

Non-operating (expense) income, net

During the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026 and ~~November~~February 3028, ~~2024~~2025, respectively, the changes in non-operating (expense), income were comprised of:

	For the three months ended												For the ~~six~~nine months ended
	November 30,			November 30,			Change			% Change			November 30,			November 30,			Change			% Change
	February 28,			February 28,			Change			% Change			February 28,			February 28,			Change			% Change
(in thousands of US dollars)	~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025						~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025
Change in fair value of warrant liability	$	~~175~~—		$	~~862~~1,338		$	(~~687~~1,338	)		(80100	)%	$	(3,495	)	$	12,~~558~~896		$	(56,~~053~~391	)		(~~324~~221	)%
Foreign exchange gain (loss)		~~(10~~12,~~327~~469	)		(3322,~~797~~290	)		2334,~~470~~759			(69156	)%		(39,~~399~~070	)		(2144,~~916~~206	)		1853,~~517~~276			(84121	)%
Loss on long-term investments		(~~345~~4,143	)		(275,474	)		~~(318~~1,331	)		~~1,178~~(24	)%		(~~306~~4,449	)		(665,540	)		~~(240~~1,091	)		~~364~~(20	)%
Unrealized loss on digital assets		(~~164~~214	)		—			(~~164~~214	)		NM			(~~172~~386	)		—			(~~172~~386	)		NM
Other non-operating (losses) gains, net		(~~1,649~~20	)		~~(293~~2,404	)		(12,~~356~~424	)		~~463~~(101	)%		(1,~~106~~126	)		~~(185~~2,219	)		(~~921~~3,345	)		~~498~~(151	)%
Total non-operating income (expense)	$	~~(12~~8,~~310~~092	)	$	(3324,~~255~~022	)	$	2032,~~945~~114			(63134	)%	$	(~~8,478~~386	)	$	(2044,~~609~~631	)	$	1244,~~131~~245			(5999	)%

For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company recognized a gain on the change in fair value of its warrants of $~~0.2~~ nil million and a loss of $3.5 million, compared to a gain of $01.93 million and $12.69 million in the prior year periods, as a result of the change in our share price and the exercise price of the warrants. For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company recognized a ~~loss~~gain of $1012.35 million and $39.41 million resulting from the changes in foreign exchange rates during the period compared to a loss of $3322.83 million and $2144.9 2 million for the prior year periods. For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company recognized a loss of $04.31 million and $04.3 4 million on long-term investments compared to a loss of $05.0 5 million and $05.15 million for the prior year periods. For the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, the Company recognized a loss of $0.2 million and $0.24 million on digital assets from the unrealized change in fair value of Bitcoin compared to $nil and $nil million for the prior year periods. The other non-operating (losses) gains, net were a loss of $10.602 million and a loss of $1.1 million for the three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to a ~~loss~~gain of $02.3 4 million and $02.2 million for the prior year periods, and was mainly comprised of a loss of $1.8 5 million on the change in fair value of assets held for sale related to Fort Collins, CO partially vacant warehouse, as described in Note 3 (capital assets), offset by a gain of $0.5 million resulting from the exchange transaction of the TLRY 27 Note, as described in Note 12 (Convertible debentures payable).

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP financial measure that does not have any standardized meaning prescribed by GAAP and may not be comparable to similar measures presented by other companies. The Company calculates adjusted EBITDA as net loss/net income before income taxes, net interest expense, depreciation and amortization, purchase price accounting step-up on inventory, stock-based compensation, impairments, other than temporary change in fair value of convertible notes receivable, restructuring costs, transaction (income) costs net, litigation costs net of recoveries, change in fair value of contingent consideration, project 420 cost savings initiatives, unrealized currency gains and losses and other adjustments.

We believe that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to the Company’s results of operations and financial condition. In addition, management uses this measure for reviewing the financial results of the Company and as a component of performance-based executive compensation.

We do not consider adjusted EBITDA in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of adjusted EBITDA is that it excludes certain expenses and income that are required by U.S. GAAP to be recorded in our consolidated financial statements. In addition, adjusted EBITDA is subject to inherent limitations as this metric reflects the exercise of judgment by management about which expenses and income are excluded or included in determining adjusted EBITDA. In order to compensate for these limitations, management presents adjusted EBITDA in connection with GAAP results.

For three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, adjusted EBITDA ~~decreased~~increased to $810.47 million and increased to $1829.53 million compared to $9.0 million and $1827.4 million for the prior year periods and remained ~~relatively consistent~~ improved as we continue to execute on our strategic plan.

	For the three months ended												For the ~~six~~nine months ended
	November 30,			November 30,			Change			% Change			November 30,			November 30,			Change			% Change
	February 28,			February 28,			Change			% Change			February 28,			February 28,			Change			% Change
Adjusted EBITDA reconciliation:	~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025						~~2025~~2026			~~2024~~2025			~~2025~~2026 vs. ~~2024~~2025
Net loss	$	(4325,~~509~~233	)	$	(85793,~~275~~534	)	$	41768,~~766~~301			(4997	)%	$	(4167,~~996~~229	)	$	(~~119~~913,~~927~~461	)	$	77846,~~931~~232			(6593	)%
Income tax expense (recovery), net		31,~~546~~974			21,~~036~~203			~~1,510~~771			7464	%		13,~~261~~235			24,~~922~~125			(~~1,661~~890	)		(5722	)%
Interest expense, net		54,~~374~~965			78,~~766~~378			(23,~~392~~413	)		(3141	)%		1217,~~070~~035			1725,~~608~~986			(58,~~538~~951	)		(3134	)%
Non-operating income (expense), net		12(8,~~310~~092	)		3324,~~255~~022			(2032,~~945~~114	)		(63134	)%		~~8,478~~386			2044,~~609~~631			(1244,~~131~~245	)		(5999	)%
Amortization		1516,~~958~~741			3433,~~050~~546			(1816,~~092~~805	)		(5350	)%		3148,~~519~~260			6599,~~864~~410			(3451,~~345~~150	)		(5251	)%
Stock-based compensation		1213,~~283~~725			74,~~237~~035			59,~~046~~690			70240	%		1731,~~335~~060			1418,~~154~~189			312,~~181~~871			2271	%
Change in fair value of contingent consideration		—			—			—			NM			(15,000	)		—			(15,000	)		NM
Project 420 business optimization		—			—			—			NM			200			—			200			NM
Impairment of intangible assets and goodwill		—			699,235			(699,235	)		(100	)%		—			699,235			(699,235	)		(100	)%
Purchase price accounting step-up		—			1,376			(1,376	)		(100	)%		—			1,551			(1,551	)		(100	)%
Other than temporary change in fair value of convertible notes receivable		—			20,000			(20,000	)		(100	)%		—			20,000			(20,000	)		(100	)%
Litigation costs, net of recoveries		869			901			(32	)		(4	)%		1,876			2,496			(620	)		(25	)%
Project 420 business optimization		—			2,600			(2,600	)		(100	)%		200			2,600			(2,400	)		(92	)%
Restructuring costs		965			6,869			(5,904	)		(86	)%		1,834			11,116			(9,282	)		(84	)%
Purchase price accounting step-up		—			59			(59	)		(100	)%		—			1,610			(1,610	)		(100	)%
Transaction costs (income), net		569			802			(233	)		(29	)%		969			1,958			(989	)		(51	)%
Litigation costs, net of recoveries		621			2,758			(2,137	)		(77	)%		2,497			5,254			(2,757	)		(52	)%
Adjusted EBITDA	$	8,365		$	9,017		$	(652	)		(7	)%	$	18,546		$	18,351		$	195			1	%
Restructuring costs		4,087			6,133			(2,046	)		(33	)%		5,921			17,249			(11,328	)		(66	)%
Transaction costs (income), net		1,927			605			1,322			219	%		2,896			2,563			333			13	%
Adjusted EBITDA	$	10,715		$	9,040		$	1,675			19	%	$	29,261		$	27,391		$	1,870			7	%

Adjusted EBITDA should not be considered in isolation from, or as a substitute for, net income (loss). There are a number of limitations related to the use of Adjusted EBITDA as compared to net income (loss), the closest comparable GAAP measure. Adjusted EBITDA adjusts for the following:

●

Non-cash amortization expenses and, although these are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future;

●

Stock-based compensation expenses, a non-cash expense and are an important part of our compensation strategy;

●

Non-cash impairment charges, as the charges are not expected to be a recurring business activity;

●

Non-cash other than temporary write-down of convertible notes receivable, as the charges are not expected to be a recurring business activity;

●

Non-cash foreign exchange gains or losses, which accounts for the effect of both realized and unrealized foreign exchange transactions. Unrealized gains or losses represent foreign exchange revaluation of foreign denominated monetary assets and liabilities;

●

Non-cash change in fair value of warrant liability;

●

Non-cash change in fair value of contingent consideration;

●

Project 420 business optimization costs;

●

Interest expense, net;

●

Costs incurred to start up new facilities, and to fund emerging market operations;

●

Transaction (income) costs, net which includes acquisition related income and expenses, related legal, financial advisor and due diligence cost and expenses and transaction related compensation, which vary significantly by transaction and are excluded to evaluate ongoing operating results;

●

Restructuring charges;

●

Litigation costs, net of favorable recoveries and the third party fees associated with defending these claims, including costs related to legacy and non-operational litigation matters, legal settlements and recoveries;

●

Amortization of purchase accounting fair value step-up in inventory value included in costs of goods sold; and

●

Current and deferred income tax expenses and recoveries, which could be a significant recurring expense or recovery in our business in the future and reduce or increase cash available to us.

Adjusted Gross Profit and Adjusted Gross Margin

Adjusted gross profit and adjusted gross margin are non-GAAP financial measures and may not be comparable to similar measures presented by other companies. Adjusted gross profit is our Gross profit (adjusted to exclude PPA valuation step-up) and adjusted gross margin is our Gross margin (adjusted to exclude PPA valuation step-up) and are non-GAAP financial measures. The Company’s management believes that adjusted gross profit and adjusted gross margin are useful to our management to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. We do not consider adjusted gross profit and adjusted gross margin percentage in isolation or as an alternative to financial measures determined in accordance with GAAP.

Liquidity and Capital Resources

We actively manage our cash, marketable securities and digital assets in order to internally fund operating needs, make scheduled interest and principal payments on our borrowings, and complete acquisitions. We believe that existing cash, cash equivalents, marketable securities, Bitcoin digital assets and cash generated by operations, together with access to external sources of funds, will be sufficient to meet our domestic and foreign capital needs for the short and long term outlook.

For the Company's short-term liquidity requirements, we are focused on generating positive cash flow from operations and being free cash flow positive. Certain of our business segments, such as cannabis, are working capital intensive and have longer cash conversion cycles. In order to mitigate these effects, management continues to optimize our infrastructure, headcount, as well as the elimination of other discretionary operational costs. Additionally, the Company continues to work on improvements to the cash conversion cycles across its businesses and invest our excess cash in short-term marketable securities, which are comprised of U.S. treasury bills, high grade corporate bonds and term deposits with major Canadian, European and Australian banks as well as in digital assets.

For the Company's long-term liquidity requirements, we are focused on funding operations through profitable organic growth and through acquisitions of businesses that are accretive to earnings and are less working capital intensive. We may need to take on additional debt or equity financing arrangements in order to achieve these target goals on a long-term basis.

On May 17, 2024, the Company entered into an equity distribution agreement with TD Securities (USA) LLC and Jefferies LLC in connection with an aggregate offering value of up to $250 million through an at-the-market equity program (“ATM Program”). During the ~~three~~nine ~~and six~~ months ended ~~November~~February 3028, ~~2025~~2026, the Company issued 6,777,224 shares under the ATM Program generating gross proceeds of $76.6 million. The Company paid $3.5 million in commissions and other fees associated with these issuances generating net proceeds of $73.1 million. The Company used ~~intends to use~~ the net proceeds from the ATM Program to fund strategic and accretive acquisitions or investments in businesses and capital expenditures for acquired businesses, including potential acquisitions of assets to capitalize on expected regulatory advancements or expansion opportunities. As of our second fiscal quarter ended November 30, 2025, the ATM program was completed.

Additionally, we are committed to optimizing our capital structure and enhancing financial flexibility as we intend to continue to opportunistically purchase or exchange equity for the TLRY 27 Notes prior to their underlying maturity date in June 2027, subject to market conditions.

The following table sets forth the major components of our statements of cash flows for the periods presented:

	For the three months ended						For the ~~six~~nine months ended
	November 30,			November 30,			November 30,			November 30,
	February 28,			February 28,			February 28,			February 28,
	2025			2024			2025			2024
	2026			2025			2026			2025
Net cash provided by (used in) operating activities	$	(821,~~537~~942	)	$	(405,~~724~~761	)	$	(931,~~878~~820	)	$	(7681,~~031~~792	)
Net cash provided by (used in) investing activities		~~(58~~28,~~005~~917	)		(~~10,725~~119	)		(334,~~538~~621	)		(60,~~120~~239	)
Net cash provided by financing activities		48,100			38,203			67,948			98,793
Net cash provided by (used in) financing activities		(5,128	)		18,071			62,820			116,864
Effect on cash of foreign currency translation		~~317~~955			(21,~~242~~933	)		~~505~~1,460			(13,~~284~~217	)
Cash and cash equivalents, beginning of period		~~264~~246,~~828~~703		$	~~205~~189,~~186~~698			221,666			228,340
Cash and cash equivalents, end of period	$	246,703		$	189,698		$	246,703		$	189,698
Cash and cash equivalents and restricted cash, end of period	$	249,505		$	199,956		$	249,505		$	199,956
Marketable securities		4415,~~848~~312			6248,~~551~~458			4415,~~848~~312			6248,~~551~~458
Cash and marketable securities(1)	$	291,551		$	252,249		$	291,551		$	252,249
Cash, restricted cash and marketable securities(1)	$	264,817		$	248,414		$	264,817		$	248,414

Within the consolidated statements of cash flows, cash and cash equivalents includes $44.9 million of restricted cash as of February 28, 2026, and $nil as of February 28, 2025.

(1)

Cash and marketable securities are non-GAAP financial measures. See “Use of Non-GAAP Measures” above for additional discussion regarding these non-GAAP measures. The Company combines the Cash and cash equivalent financial statement line item, and the Marketable securities financial statement line item as an aggregate total as reconciled in the liquidity and capital resource section below. The Company’s management believes that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to its short-term liquidity position by combing these three GAAP metrics.

Cash flows from operating activities

The change in net cash used in operating activities was ($821.59) million and ($931.98) million for three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to ($405.78) million and $($7681.08) million for the prior year periods. ~~The~~Excluding the impact of changes in working capital, operating cash flow was $3.4 million and $11.1 million for three and nine months ended February 28, 2026, compared to cash used in operations of ($9.4) million and ($30.3) million in the prior year periods, which were negatively impacted by the integration of Craft Acquisition I, ~~which~~and ~~required~~II. The increase in cash used for working capital ~~investments~~during ~~and have~~the ~~now~~three ~~normalized~~months ended February 28, 2026 primarily reflects preparation for a seasonally higher fourth quarter.

Cash flows from investing activities

The change in net cash provided by (used in) investing activities was ($5828.0)9 million and ($334.56) million for three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to ($100.71) million and ($60.12) million for the prior year periods, and was a result of the change in investments in marketable securities in the current periods and that Craft Acquisition II occurred in the prior year period.

Cash flows from financing activities

The change in cash provided by financing activities was ($485.1) million and $6762.98 million for three and ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, compared to $3818.21 million and $98116.89 million for the prior year periods primarily due to variability in funds provided under the ATM Program.

Contingencies

In addition to the litigation described in the Part II, Item 1 - Legal Proceedings, the Company is and may be a defendant in lawsuits from time to time in the normal course of business. While the results of litigation and claims cannot be predicted with certainty, the Company believes the reasonably possible losses of such matters, individually and in the aggregate, are not material. Additionally, the Company believes the probable final outcome of such matters will not have a material adverse effect on the Company’s consolidated results of operations, financial position, cash flows or liquidity.

Critical Accounting Estimates

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States. The accounting principles we use require us to make estimates and assumptions that may impact the reported amounts of assets and liabilities as of the date of the financial statements and amounts of income and expenses during the reporting periods presented. We believe in the quality and reasonableness of our critical accounting policies, however, materially different amounts may be reported under different conditions or using assumptions different from those that we have applied. The accounting estimates that have been identified as critical to our business operations and to understanding the results of our operations pertain to revenue recognition, valuation of inventory, valuation of long-lived assets, goodwill and intangible assets, stock-based compensation and valuation allowances for deferred tax assets. The application of each of these critical accounting policies and estimates is discussed in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations set forth in, our Annual Report on Form 10-K for the fiscal year ended May 31, 2025.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in “Part I, Item 1. Note 1 – Basis of presentation and summary of significant accounting policies” to our financial statements appearing elsewhere in this Quarterly Report on Form 10-Q.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

During the ~~six~~nine months ended ~~November~~February 3028, ~~2025~~2026, there have been no material changes in market risk from those addressed in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2025. See the information set forth in Part II, Item 7A, Quantitative and Qualitative Disclosures About Market Risk set forth in the Company’s Annual Report on Form 10-K for the fiscal year ended May 31, 2025.

Item 4. Controls and Procedures.

Disclosure Controls and Procedures

We maintain disclosure controls and procedures (as ~~that term is~~ defined in Rules 13a-15(e) and 15d-15(e) under Securities and Exchange Act of 1934 (the “Exchange Act”) that are designed to ensure that information required to be disclosed inby ~~our~~us in reports filed or submitted under the Exchange Act is recorded, processed, and summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to ~~our~~ management, including our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), as appropriate, to allow timely decisions regarding required disclosures. ~~Any~~Controls ~~controls~~ and procedures, no matter how well designed and operated, can ~~provide~~ only provide reasonable assurance of achieving the desired control objectives. Our Anmanagement ~~evaluation~~team, ofincluding the ~~effectiveness~~CEO ofand ~~the~~CFO, ~~design~~supervised and ~~operation~~participated ofin reviewing how effective our disclosure controls and procedures were as of the end of ~~the period covered by~~ this ~~Quarterly~~quarterly ~~Report~~reporting ~~was made under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer~~period.

~~Based~~Following ~~upon~~ this evaluation, ~~our~~the ~~Chief~~CEO ~~Executive Officer~~ and ~~Chief~~CFO ~~Financial Officer~~ have ~~concluded~~determined that, as of ~~November~~February 3028, ~~2025~~2026, our disclosure controls and procedures (a) are effective toin ~~ensure~~ensuring ~~that~~timely ~~information~~recording, ~~required~~processing, tosummarization, beand ~~disclosed~~reporting byof usinformation inrequired ~~reports filed or submitted~~ under the Exchange Act ~~is timely recorded~~, ~~processed, summarized~~ and ~~reported and~~ (b) ~~include,~~incorporate ~~without limitation,~~ controls and procedures designed to ~~ensure~~guarantee that such information ~~required to be disclosed by us in reports filed or submitted under the Exchange Act~~ is ~~accumulated~~collected and communicated to ~~our~~ management, including ~~our~~the ~~Chief~~CEO ~~Executive Officer~~ and ~~Chief Financial Officer~~CFO, as ~~appropriate~~necessary to ~~allow~~permit timely decisions regarding required ~~disclosure~~disclosures.

Changes in Internal Control over Financial Reporting

There ~~have been~~ were no changes in our “internal control over financial reporting” (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) that occurred during the period covered by this Quarterly Report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. 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 may be increased or decreased to reflect any relevant developments on a quarterly basis. Where a loss is not probable or the amount of loss is not estimable, we do not accrue legal reserves. While the outcome of legal proceedings is inherently uncertain, based on information currently available, our management believes that it has established appropriate legal reserves. Any liabilities arising from pending legal proceedings are not 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.

“Item 3. Legal Proceedings” of our Annual Report on Form 10-K for the fiscal year ended May 31, 2025 includes a discussion of our legal proceedings. There have been no material changes from the legal proceedings described in our Form 10-K, as disclosed and incorporated herein by reference to Note 19 (Commitments and contingencies) to the Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Item 1A. Risk Factors.

“Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended May 31, 2025 includes a discussion of our known material risk factors, other than risks that could apply to any issuer or offering. A summary of our risk factors is included below. Except for the below risk factors, there have been no material changes from the risk factors described in our Form 10-K.

● We may not achieve the expected revenue or other benefits from the craft beer operations we acquired in ~~fiscal~~the ~~years~~past ~~2024~~several ~~and 2025~~years.

● We may experience difficulties integrating operations and realizing the expected benefits of recent acquisitions, including the Craft brands and BrewDog acquisitions.

●

Our cannabis business is dependent upon regulatory approvals and licenses, ongoing compliance and reporting obligations, and timely renewals.

● ~~Government~~There ~~regulation~~are ~~is evolving, including potential~~ regulatory ~~developments~~risks inassociated with the ~~United~~rescheduling ~~States~~of ~~to reschedule~~ cannabis from Schedule I to Schedule III under the Controlled Substances Act. Inin ~~November~~the ~~2025, new~~ U.S. ~~federal~~and ~~legislation~~uncertainties ~~was~~in ~~enacted that banned~~ the ~~production~~implementation orof ~~sale~~our ofplanned ~~hemp-derived~~medical cannabis, ~~including Delta-9~~platform. ~~This restriction is scheduled to go into effect on November 12, 2026.~~

●

There are regulatory risks associated with evolving government regulations, including in November 2025, new U.S. federal legislation which was enacted and banned the production or sale of hemp-derived cannabis, including Delta-9. This restriction is scheduled to go into effect on November 12, 2026.

●

We are subject to potential modifications to existing regulatory frameworks outside of North America, as well as uncertainties and potential delays in receiving required export/import permits in Europe and Australia. Any unfavorable changes to or lack of commercial legalization, or extended delays in receipt of required permits, could negatively impact our businesses and the potential planned expansion of our business.

●

We face intense competition, including from the illicit cannabis market, and anticipate competition will increase, which could hurt our business.

●

Our production and processing facilities are integral to our business and adverse changes or developments affecting our facilities may have an adverse impact on our business.

●

Regulations constrain our ability to market and distribute our products in Canada.

●

United States regulations relating to hemp-derived CBD products, Delta-9 products, and medical cannabis products are new and rapidly evolving, and changes may not develop in the timeframe or manner most favorable to our business objectives.

●

Changes in consumer preferences or public attitudes about alcohol could decrease demand for our beverage products.

● SweetWater, Breckenridge, Montauk, BrewDog and our recently-acquired craft beer brands each face substantial competition in the beer industry or the broader market for beverage products, which could impact our business and financial results.

●

We are subject to litigation, arbitration and demands, which could result in significant liability and costs, and impact our resources and reputation.

●

Our business may be materially adversely affected by the imposition of duties and tariffs and other trade barriers and retaliatory countermeasures implemented by the U.S. and other governments.

●

Additional impairments of our goodwill and impairments of our long-lived assets could have a material adverse impact on our financial results.

●

We have a limited operating history and a history of net losses, and we may not achieve or maintain profitability in the future

●

Our strategic alliances and other third-party business relationships may not achieve the intended beneficial impact and expose us to risks.

●

We may not be able to successfully identify and execute future acquisitions, dispositions or other equity transactions or to successfully manage the impacts of such transactions on our operations.

●

We are subject to risks inherent in an agricultural business, including the risk of crop failure.

●

We depend on recurring customers for a substantial portion of our revenue. If we fail to retain or expand our customer relationships or these customers reduce their purchases, our revenue could decline significantly.

●

Our products may be subject to recalls for a variety of reasons, which could require us to expend significant management and capital resources.

●

Significant interruptions in our access to certain supply chains for key inputs such as raw materials, supplies, electricity, water and other utilities may impair our operations.

●

Management may not be able to successfully establish and maintain effective internal controls over financial reporting.

●

The price of our common stock in public markets has experienced and may continue to experience severe volatility and fluctuations.

●

The volatility of our stock and the stockholder base may hinder or prevent us from engaging in beneficial corporate initiatives.

●

We may not have the ability to raise the funds necessary to settle conversions of the convertible securities in cash or to repurchase the convertible securities upon a fundamental change.

●

Our cryptocurrency strategy faces high risk and uncertainty in light of market volatility and an evolving regulatory landscape.

●

We may be exposed to financial losses and operational risks due to our decision to self-insure certain real property assets.

●

We are subject to other risks generally applicable to our industry and the conduct of our business.

~~There~~Geopolitical ~~are~~instability ~~regulatory~~involving ~~risks associated with~~ the ~~rescheduling~~conflict ofin ~~cannabis~~Iran incould ~~the~~increase ~~U.S.~~ fuel and ~~uncertainties~~energy costs in ~~the~~Europe ~~implementation~~and ofadversely affect our ~~planned~~operations ~~medical~~and ~~cannabis platform~~results.

~~The~~Ongoing ~~recently~~geopolitical ~~announced~~instability ~~U.S.~~in ~~federal cannabis rescheduling order has introduced significant uncertainty regarding~~ the ~~scope,~~Middle ~~timing~~East, ~~and~~including ~~ultimate~~the ~~impact~~conflict ofinvolving ~~potential~~Iran, ~~changes~~has contributed to ~~U.S.~~volatility ~~federal~~in ~~cannabis~~global ~~regulation.~~oil ~~Our business, financial condition,~~ and ~~results~~natural ofgas ~~operations~~markets. ~~may~~Disruptions beor ~~materially~~perceived ~~adversely~~risks ~~affected~~to ifenergy ~~such~~supply ~~changes~~routes, doincluding ~~not~~shipping ~~occur~~through askey ortransit ~~when~~points, ~~anticipated~~have orresulted ~~impose~~in ~~requirements~~increased wefuel ~~are~~and ~~unable~~energy toprices ~~meet.~~in ~~Although~~Europe ~~federal~~and ~~cannabis~~could ~~rescheduling~~continue ~~is expected~~ to ~~create~~do ~~expanded~~so ~~opportunities~~ for ~~our~~an ~~business~~extended ~~in the U~~period.~~S.,~~ ~~including~~Europe ~~our~~remains ~~planned~~exposed ~~launch~~to ofglobal aenergy ~~medical~~price ~~cannabis platform in 2026~~fluctuations, ~~the final outcome of federal rulemaking—along with related DEA~~ and ~~FDA~~increases ~~oversight~~in fuel, ~~enforcement priorities~~transportation, and ~~interaction~~utility ~~with~~costs ~~state-level~~could ~~regulatory~~adversely ~~frameworks—remains~~affect ~~unclear~~our ~~and~~operating ~~may~~expenses, ~~materially~~supply ~~differ~~chain ~~from current expectations. Legal challenges to rescheduling~~costs, ~~shifts in federal or state regulatory priorities~~margins, orand the ~~imposition~~cost of ~~restrictive~~energy‑intensive ~~compliance~~activities, ~~manufacturing,~~including orour ~~distribution~~brewing ~~requirements~~and ~~could~~cannabis ~~delay,~~cultivation ~~limit~~operations, orparticularly ~~prevent~~within our ~~ability~~European tobusinesses. ~~commercialize~~The ~~medical~~duration ~~cannabis~~and ~~products~~severity inof the ~~U.S.~~conflict Ifremain ~~the resulting regulatory environment is more restrictive than anticipated~~uncertain, isand ~~not~~any ~~implemented~~escalation ~~on a timely basis,~~ or ~~otherwise~~prolongation ~~fails to permit a viable market pathway, we may be unable to pursue our planned U.S. medical cannabis strategy as intended, which~~ could ~~adversely~~exacerbate ~~impact~~these ~~our growth prospects, strategic objectives, and anticipated investments~~risks.

WeOur ~~may~~ability beto ~~exposed~~complete the BrewDog U.S. acquisition is subject to ~~financial~~regulatory ~~losses~~approvals, and ~~operational~~we may face risks ~~due~~associated towith ~~our~~integrating ~~decision~~all toof ~~self-insure~~the ~~certain real~~acquired ~~property~~BrewDog ~~assets~~businesses.

WeThe ~~recently~~completion ~~transitioned several~~ of our ~~real~~ ~~property~~proposed ~~assets~~acquisition ~~from~~of ~~third‑party~~BrewDog' ~~insurance coverage to a self‑insurance model~~U.S. ~~Under~~assets ~~this~~is ~~approach,~~dependent weon ~~bear~~receipt ~~the~~of ~~financial~~certain ~~risk~~regulatory ~~associated~~approvals. ~~with~~There ~~potential~~can ~~losses,~~be ~~damages,~~no ~~business~~assurance ~~interruption,~~that ~~remediation~~such ~~costs,~~approvals orwill ~~other~~be ~~liabilities~~obtained ~~relating~~on toa ~~these~~timely ~~properties.~~basis ~~While~~or weat ~~believe~~all, ~~this~~or ~~strategy~~that ~~appropriately~~they ~~balances~~will ~~cost~~not ~~management~~include ~~and~~conditions ~~risk, it exposes us to risks~~ that could ~~materially~~delay ~~and~~or otherwise adversely affect ~~our~~the ~~business,~~anticipated ~~financial~~benefits ~~condition, and results~~ of ~~operations~~the transaction. ~~Loss~~ In ~~events such as fire~~addition, ~~flooding,~~we ~~natural~~will ~~disasters,~~be ~~equipment~~subject ~~failures,~~to ~~structural~~risks ~~degradation,~~commonly ~~theft,~~associated orwith ~~other~~integrating ~~property‑related~~acquired ~~incidents~~businesses, ~~could~~including ~~require~~difficulties ~~significant~~integrating ~~out‑of‑pocket~~operations, ~~expenditures.~~systems ~~Depending on the nature~~ and ~~magnitude~~controls; ofchallenges ~~any~~in ~~such~~retaining ~~event,~~customers; weand ~~may~~potential ~~incur~~disruptions ~~substantial unplanned costs, experience facility downtime, or have reduced capacity~~ to ~~cultivate,~~ongoing ~~manufacture,~~business ~~store, or distribute products~~activities. ~~These~~The ~~outcomes~~integration ~~could~~process ~~disrupt~~of ~~supply~~BrewDog's ~~chains,~~operations ~~delay~~may ~~production,~~require ~~impair~~significant ~~revenue~~management ~~generation,~~attention orand ~~necessitate~~financial ~~capital~~resources ~~expenditures not otherwise planned. In addition, our determination of appropriate reserves~~ and ~~internal risk‑mitigation processes~~ may ~~prove~~not ~~inadequate.~~achieve If the ~~scope,~~anticipated ~~frequency,~~synergies or ~~severity~~strategic ofbenefits ~~property‑related~~within ~~losses~~the ~~exceeds~~expected ~~our expectations, we may experience materially higher expenses or capital requirements~~timeframes. Any of these factors, ~~individually or in the aggregate,~~ could ~~materially and~~ adversely ~~impact~~affect our ~~operating results~~business, ~~cash~~financial ~~flows~~condition, and ~~liquidity~~results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Recent Sales of Unregistered Equity Securities

OnNot ~~October 9, 2025, Tilray entered into an assignment and assumption agreement with Double Diamond Holdings Ltd~~applicable. (“DDH”), an Ontario corporation, pursuant to which, among other things, Tilray acquired from DDH a promissory note in the amount of $14,821 (the “Note”) payable by 1974568 Ontario Limited (“Aphria Diamond”). DDH is a joint venturer with Aphria Inc. (Tilray’s wholly-owned subsidiary) in Aphria Diamond. As consideration for the Note, Tilray issued 861,707 shares of its Common Stock to DDH.

The shares of Common Stock issued in the foregoing transaction were issued without registration under the Securities Act of 1933, as amended, in reliance on the exemption provided by Section 3(a)(9) thereunder as securities exchanged by the Company with an existing security holder where no commission or other remuneration was paid or given directly or indirectly for soliciting such exchange.

Item 3. Defaults Upon Senior Securities.

Not applicable.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

Not applicable.

Item 6. Exhibits.

Exhibit Number		Description
3.1		Certificate of Amendment of the Fifth Amended and Restated Certificate of Incorporation of the Company, filed on November 26, 2025 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the U.S. Securities and Exchange Commission on November 26, 2025).
10.1*		Business and Asset Sale Agreement, dated March 2, 2026, by and among Tilray Brands, Inc., BrewDog plc, BrewDog Retail Limited, Draft House Holding, BrewDog International Limited, and Tilray Brands UK Ltd.
31.1*		Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Exhibit Number		Description
32.2**		Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*		The following financial statements from the Company's Quarterly Report on Form 10-Q for the quarter ended ~~November~~February 3028, ~~2025~~2026, formatted in Inline XBRL: (i) Consolidated Statements of Financial Position, (ii) Consolidated Statements of Loss and Comprehensive Loss , (iii) Consolidated Statements of Stockholders' Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to Condensed Interim Consolidated Financial Statements, tagged as blocks of text and including detailed tags.
104*		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

* Filed herewith.

** Furnished herewith.

† Schedules have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Tilray Brands, Inc.
Date: January 8, 2026	By:	/s/ Irwin D. Simon
Date: April 1, 2026	By:	/s/ Irwin D. Simon
		Irwin D. Simon
		Chairman and Chief Executive Officer
Date: January 8, 2026	By:	/s/ Carl Merton
Date: April 1, 2026	By:	/s/ Carl Merton
		Carl Merton
		Chief Financial Officer

Filing Compare · Tilray Brands, Inc.