The following Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to help the reader understand our results of operations and our present business environment from the perspective of management. You should read the following discussion and analysis of our financial condition and results of operations together with the “Cautionary Note Regarding Forward-Looking Statements”; the sections in Part I entitled “Item 1A. Risk Factors” and the financial information and the notes thereto included in Part II, Item 8 of this Form 10-K in this Annual Report for the fiscal year ended May 31, 2026 (“Annual Report”). We use certain non-GAAP measures that are more fully described below under the caption “—Use of Non-GAAP Measures,” which we believe are appropriate supplemental non-GAAP measures to evaluate our business and operations, measure our performance, identify trends affecting our business, project our future performance, and make strategic decisions. Amounts are presented in thousands of United States dollars, except for shares, warrants, per share data and per warrant data or as otherwise noted. 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 and wellness, while creating memorable experiences that bring people together. Our overall strategy is to leverage our brands, infrastructure, expertise and capabilities to drive revenue growth in the industries and channels 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 and products and entries into new geographies. In addition, we are relentlessly focused on managing our cost structure and expenses in order to expand margins and 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 foods, all of whom apply an innovative and consumer-centric approach to our businesses. Trends and Other Factors Affecting Our Business U.S. Beverage market trends: Within the beverage category, we expect the following key trends to shape the near-term outlook in this segment: - Beverage Distribution. In furtherance of our strategic vision, we remain focused on enhancing 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. - Innovation. In the United States, we have been closely monitoring consumer beverage trends, which have included consumers drinking less beverage alcohol products for a variety of reasons 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 category analysis, consumer insights, and portfolio diversification into alternative beverage options. More specifically, we have launched products such as Cruisies and 10 Barrel’s Salty Sips line, a lower‑sugar vodka-based refresher made with real fruit juice and a pinch of sea salt. For consumers seeking to reduce their beverage alcohol consumption, the portfolio continues to scale across non‑alcoholic craft beer, clean‑label energy drinks fortified with vitamins, and 10 Barrel Clean Slate, a functional non‑alcoholic cocktail offering. Our innovation pipeline also includes flavored malt beverage offerings under the Popsicle brand, developed through a licensing partnership to bring iconic, nostalgic Popsicle flavors into ready‑to‑drink adult beverages. 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 18 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. This includes our four recently acquired BrewDog U.S. brew pubs, including a flagship multi‑level location on the Las Vegas Strip. An important part of our strategic plan for our craft beer business centers on the role that brew pubs and experiential hospitality 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 positioning as a lifestyle-driven spirits brand. 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. Breckenridge Distillery products are available in all 50 states, with continued planned expansion into other product categories 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 that our award-winning portfolio and innovative product introductions positions Breckenridge Distillery for sustained growth and enhanced market presence. U.K. Beverage market trends: In the U.K., the beverage alcohol market remains highly competitive and continues to be impacted by evolving consumer preferences, cost pressures, and moderation trends. Consumers are increasingly seeking premium products, no and low-alcohol alternatives, and differentiated brand experiences across both retail and hospitality channels. Through BrewDog’s established brand portfolio, retail and e-commerce presence, and company-operated bar network, we believe we are positioned to compete in the U.K. market while focusing on core brand performance, operational efficiency, and selective innovation. 41 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 fourth fiscal quarter, Tilray continued to lead the Canadian market with the highest cannabis revenue in Canada. However, during the fourth fiscal quarter, we experienced a decrease in market share in Canada from 8.5% to 7.9% from the immediately preceding quarter as reported by Hifyre data for all provinces, excluding Quebec where Weedcrawler was deemed more accurate. The 55 basis point decline primarily reflected a 162 basis point decrease in the whole flower category, resulting from a planned cultivation strain rotation that temporarily impacted supply, and a 660 basis point decrease in the straight-edge pre‑roll category due to an out‑of‑stock experienced by a componentry vendor despite maintaining a market leading position within this category. These declines were partially offset by modest increases in the vape, beverage, and infused pre-roll categories as the Company continues to scale in these high-growth, ready-to-consume product formats. Despite the decline in flower market share, the Company remains focused on improving profitability within the category by prioritizing higher-margin premium brands, including Broken Coast, and supporting targeted innovation, including recent launches of Lemon Cherry Poppers under the Good Supply brand and Ice Cream RNTZ. The Company continues to enhance its global supply chain and expand its cultivation footprint to support demand across Canadian and international markets. We have successfully optimized our Quebec cultivation facility and expect it to generate meaningful flower output in the second half of fiscal 2027, which may be directed to international markets based on potential customer demand. During the fiscal quarter ended May 31, 2026, the Company opportunistically redirected approximately 0.5 Metric Tons to international markets, which are expected to generate higher margin sales. - 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. 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 tax per gram further compounds these challenges, and has promoted ongoing industry lobbying efforts. International cannabis market 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 cannabis legalization. Meaningful progress in the legalization and regulation of cannabis for medical purposes, has now taken place in more than 21 countries representing a population of more than 526 million people (Germany, UK, Italy, Poland, Netherlands, Czech Republic, Greece, Portugal, Austria, Switzerland, Denmark, Croatia, Malta, Luxembourg, Ukraine, Sweden, Norway, Türkiye, Ireland and Spain). Beyond this, some countries have expressed a clear political ambition to legalize adult-use cannabis (Portugal and Luxembourg), some are engaging in programs for adult-use legalization (Netherlands and Switzerland) and some are debating regulations for cannabinoid-based medicine (France). 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 Malta in 2021, in Czech Republic in 2026 and more concretely in Germany in 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 continuing to develop with Australia and Israel representing some of the larger markets and with some Latin American countries also growing their respective medical cannabis markets, such as Argentina, Panama, Colombia and Brazil. 42 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 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. This license improves our ability to meet the needs of patients and 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 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 U.K. 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 U.K. market with mainly whole flower products from brands such as Good Supply through our distributor partners with sights on growing our portfolio to extracts and other formats. The Lyphe Acquisition brings deep clinical expertise and a strong patient-first approach that immediately strengthens our capabilities in the U.K. 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 Tilray Medical Italia to pharmacies across Italy. 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. Spain. Spain introduced a formal medical cannabis framework in October 2025 (Royal Decree 903/2025), marking the first time cannabis-based treatments are systematically regulated within its healthcare system. The model is highly controlled and built around standardized cannabis preparations (magistral formulas) rather than licensed commercial products, with strict requirements on composition (THC/CBD), manufacturing quality, traceability, and pharmacovigilance under the supervision of the Spanish Medicines Agency (AEMPS). Ukraine. Ukraine established a national medical cannabis framework in 2024, driven largely by the need to treat war‑related conditions such as chronic pain and post‑traumatic stress disorder (PTSD). The law (No. 3528‑IX), signed in February 2024 and effective from August 16, 2024, legalized cannabis for medical, scientific, and educational purposes, removing cannabis extracts from the list of prohibited substances and enabling their cultivation, manufacturing, import/export, and dispensing under strict licensing and quota controls. The regulatory system is highly pharmaceutical in nature: products must be registered as medicines or compounded in pharmacies using approved APIs, with full traceability, security requirements (e.g. controlled cultivation environments and surveillance), and oversight by the Ministry of Health and the State Medicines Service. Brazil. Brazil has recently implemented a major overhaul of its medical cannabis regulatory framework (2025–2026), transitioning from a temporary, import‑dependent model (RDC 327/2019) to a more comprehensive, pharmaceutical-grade system covering the entire value chain. The new rules adopted by ANVISA in early 2026 (notably RDC 1.012–1.015/2026) establish for the first time clear provisions for cultivation, manufacturing, research, and commercialization under strict licensing and oversight. Cannabis products are formally defined as industrialized medicinal products based primarily on CBD or CBD-dominant extracts, reinforcing a pharmaceutical approach and excluding non-medical formats (e.g. cosmetics or wellness products). The framework also introduces domestic cultivation (≤0.3% THC) for medical purposes, a regulatory sandbox for controlled pilot activities (including patient associations), and stricter GMP, traceability, and quality standards aligned with international norms. France. France is approaching full approval of a permanent medical cannabis framework, following a multi‑year pilot (2021–2026) and a prolonged regulatory process. The government has already finalized the core legal architecture, including draft decrees covering prescription, production, and distribution, which have been submitted to the European Commission and reviewed by the Conseil d’État. The forthcoming approval is expected to introduce a highly controlled, evidence-driven model: cannabis will be prescribed only as treatment for defined conditions (e.g. neuropathic pain, epilepsy, multiple sclerosis spasticity, oncology and palliative care), using standardized pharmaceutical products (oils, capsules, possibly vaporized formats) under strict ANSM oversight. Prescription will initially remain specialist-led, with potential gradual involvement of general practitioners, and products will require full pharmaceutical compliance (quality, traceability, GMP). A critical pending step is the HAS (Haute Autorité de Santé) evaluation, expected to determine reimbursement and clinical value in late 2026, which will ultimately define real patient access. If favorable, broad patient access is targeted for 2027, positioning France as a large regulated medical cannabis market. 43 U.S. cannabis market trends. In April 2026, the U.S. Department of Justice issued an order rescheduling FDA‑approved cannabis products and state‑licensed medical cannabis from Schedule I to Schedule III under the Controlled Substances Act. Concurrently, the DEA is conducting an expedited administrative hearing to consider broader rescheduling, which faces legal challenges in the D.C. Circuit Court of Appeals. As a global leader in medical cannabis, we believe we are well-positioned to participate in a federally compliant U.S. medical cannabis market, but we are monitoring the regulatory landscape and legal challenges that are ongoing. We continue to believe that these recent efforts to reschedule cannabis from Schedule I to Schedule III under the Controlled Substances Act represent meaningful progress toward broader cannabis reform and have the potential to accelerate clinical research, broaden patient access, and support the development of a regulated, science-driven medical cannabis market in the United States. Wellness market trends. Tilray Wellness’s branded business continues to grow across brick-and-mortar retail as well as e-commerce, which 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, as well as functional beverages 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 year ended May 31, 2026, we incurred $6.3 million of transaction costs (income), net, as discussed further below. Carlsberg. On February 5, 2026, we entered into an exclusive licensing agreement, which commences on January 1, 2027, with the Carlsberg Group, one of the world’s premier brewing organizations and among the largest globally by revenue. Under the terms of the agreement, Tilray has been granted a multi-year license to produce, market, sell and distribute Carlsberg®, Carlsberg Elephant®,1664®, and Kronenbourg 1664 Blanc® branded beers across all channels in the United States, beginning January 1, 2027. The agreement has an initial five-year term, with an automatic renewal for an additional five years subject to performance criteria. Panama. On October 13, 2025, we entered into a strategic partnership for medical cannabis operations in Panama. Under this partnership, the Company holds a 25% equity interest in Solana Life Group, S. de R.L., a Panamanian entity. The joint venture is engaged in the importation, distribution, and commercialization of medical cannabis products in Panama. During the fiscal year ended May 31, 2026, there were no transactions with this entity. BrewDog. Between March and April 2026, Tilray completed the BrewDog Acquisition. As the only global craft beer brand, the BrewDog Acquisition served to transform our beverage platform from a U.S. platform to a global platform and provided us with the international presence, team and capabilities to support the broader distribution of our U.S. beverage brands across key international markets, all in line with our previously disclosed ambition. Lyphe. On April 15 2026, Tilray acquired the Lyphe Group, a UK-based medical cannabis clinic and digital pharmacy platform. Through Lyphe’s online clinic and pharmacy platform, we will seek to enhance access to medical cannabis while accelerating its existing capabilities in dispensing traditional prescription medicines, creating a seamless, digitally enabled patient experience. 44 Beverage segment Project 420: During the fiscal quarter ended February 28, 2026, we considered the Project 420 plan to be completed due to reaching the cost savings target that we had set out to achieve even though there are still ongoing initiatives relating to additional cost savings, SKU rationalization and distributor rationalization. As a result of the actions implemented under the plan, the Company expects to realize ongoing cost savings and operational efficiencies in future periods. 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 larger and 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 and in need of investment in order to promote growth at a significantly reduced price. To support the growth of these acquired brands and establish a clear path to profitability, we implemented Project 420, which was a comprehensive plan covering (i) SKU 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. This initiative is still ongoing. - 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 and so distribution 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. - Distributor rationalization – As a result of our various acquisitions, 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. This initiative is still ongoing. - 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. During the fiscal year ended May 31, 2026, we have completed the synergy optimization plan achieving the $33.0 million target. While this initiative is complete, management remains focused on disciplined cost management and continues to advance additional cost‑saving initiatives across the business to drive further 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 core brands in order to re-establish their dominance in their home markets. Our intention is to fund this investment through the cost savings and synergies achieved through Project 420 as well as future cost savings and operational efficiency initiatives. 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 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 limited expected impacts on revenue from the recently enacted U.S. tariffs and foreign enacted retaliatory tariffs in most reporting segments. However, on July 20, 2026, the U.S. government announced additional 50% tariffs on certain Canadian imports. To the extent these tariffs become effective, they predominantly would apply to products sold by the Company’s Wellness reporting segment, and could increase costs, disrupt supply chains and distribution channels, and may adversely impact Wellness operating results. The Company is actively monitoring developments related to these tariffs, evaluating potential impacts on its business, and adapting its operations and mitigation strategies as appropriate. From a cost perspective, we believe the recently enacted tariffs have and may continue to impact input materials such as aluminum, hops, barley, malt and vape componentry, which are partially imported. We intend to mitigate these impacts to the extent possible. In addition, the recent U.S. federal regulatory developments regarding cannabis rescheduling represent a significant shift in the political and legislative environment. This evolution is expected to lead to a legitimate regulatory framework for the provision and use of medical cannabis as a therapy for a multitude of conditions and disease states, bring U.S. drug policy in line with the drug policies of other countries around the world today. We expect that this will also lead to more research, clinical development, and education, aligning closely with Tilray’s established global expertise in regulated medical cannabis markets. We continue to monitor these recent developments, including the recent legal challenges to these regulatory developments in the D.C Circuit of Appeals. With more clarity on the regulatory framework and the outcomes of the legal challenges, we intend to leverage our 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. 45 Results of Operations Our consolidated results, in millions except for per share data, are as follows: For the year ended May 31, Change Change (in thousands of U.S. dollars) 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 Net revenue $ 915,454 $ 821,309 $ 788,942 $ 94,145 11 % $ 32,367 4 % Cost of goods sold 655,013 580,739 565,591 74,274 13 % 15,148 3 % Gross profit 260,441 240,570 223,351 19,871 8 % 17,219 8 % Operating expenses: General and administrative 203,629 167,324 167,358 36,305 22 % (34 ) (0 )% Selling 49,328 56,039 37,233 (6,711 ) (12 )% 18,806 51 % Amortization 19,585 88,616 84,752 (69,031 ) (78 )% 3,864 5 % Marketing and promotion 42,290 37,048 41,933 5,242 14 % (4,885 ) (12 )% Research and development 361 284 635 77 27 % (351 ) (55 )% Change in fair value of contingent consideration (15,000 ) — (15,790 ) (15,000 ) NM 15,790 (100 )% Impairment of intangible assets and goodwill — 2,096,139 — (2,096,139 ) (100 )% 2,096,139 NM Other than temporary change in fair value of convertible notes receivable — 21,661 42,681 (21,661 ) (100 )% (21,020 ) (49 )% Litigation costs, net of recoveries 3,902 17,347 8,251 (13,445 ) (78 )% 9,096 110 % Restructuring costs 13,113 34,283 15,581 (21,170 ) (62 )% 18,702 120 % Transaction costs (income), net 6,260 4,534 15,462 1,726 38 % (10,928 ) (71 )% Total operating expenses 323,468 2,523,275 398,096 (2,199,807 ) (87 )% 2,125,179 534 % Operating loss (63,027 ) (2,282,705 ) (174,745 ) 2,219,678 (97 )% (2,107,960 ) 1,206 % Interest expense, net (23,663 ) (29,952 ) (36,433 ) 6,289 (21 )% 6,481 (18 )% Non-operating (expense) income, net (1,370 ) 10,284 (37,842 ) (11,654 ) (113 )% 48,126 (127 )% Loss before income taxes (88,060 ) (2,302,373 ) (249,020 ) 2,214,313 (96 )% (2,053,353 ) 825 % Income tax expense 17,098 (121,017 ) (26,616 ) 138,115 (114 )% (94,401 ) 355 % Net loss $ (105,158 ) $ (2,181,356 ) $ (222,404 ) $ 2,076,198 (95 )% $ (1,958,952 ) 881 % 46 Use of Non-GAAP Measures The Company reports its financial results in accordance with U.S. GAAP. However, throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations in this Annual Report on Form 10-K, we discuss non-GAAP financial measures, including reference 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 measure provides useful information to investors because it provides transparency to underlying performance in our consolidated net sales by excluding the effect that foreign currency exchange rate fluctuations have on period-to-period comparability given the volatility in foreign currency exchange markets. 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 rates 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’s 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 and restricted cash financial statement line item with 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 two GAAP metrics. 47 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 year ended May 31, (in thousands of U.S. dollars) 2026 2025 2024 Net beverage revenue $ 253,976 $ 240,595 $ 202,094 Net cannabis revenue 268,342 249,001 272,798 Distribution revenue 327,244 271,228 258,740 Wellness revenue 65,892 60,485 55,310 Beverage costs 162,743 147,591 113,522 Cannabis costs 161,256 150,005 182,594 Distribution costs 286,589 241,896 230,596 Wellness costs 44,425 41,247 38,879 Adjusted gross profit (excluding PPA step-up) (1) 262,591 242,180 235,581 Beverage adjusted gross margin (excluding PPA step-up) (1) 37 % 39 % 46 % Cannabis adjusted gross margin (excluding PPA step-up) (1) 40 % 40 % 36 % Distribution gross margin 12 % 11 % 11 % Wellness gross margin 33 % 32 % 30 % Adjusted EBITDA (1) $ 61,139 $ 55,035 $ 60,465 Cash, restricted cash and marketable securities (1) as at the year ended: 234,631 256,363 260,522 Working capital as at the year ended: $ 433,754 $ 408,323 $ 378,540 (1) Adjusted EBITDA, adjusted gross profit, adjusted gross margin for each of our segments are non-GAAP financial measures, and cash, restricted cash and marketable securities. See “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, Restricted Cash and Marketable Securities." 48 Segment Reporting Our reportable segments net revenue is primarily comprised of net revenues from our beverage, cannabis, distribution, and wellness operations, as follows: For the year ended May 31, Change Change (in thousands of U.S. dollars) 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 Beverage business $ 253,976 $ 240,595 $ 202,094 $ 13,381 6 % $ 38,501 19 % Cannabis business 268,342 249,001 272,798 19,341 8 % (23,797 ) (9 )% Distribution business 327,244 271,228 258,740 56,016 21 % 12,488 5 % Wellness business 65,892 60,485 55,310 5,407 9 % 5,175 9 % Total net revenue $ 915,454 $ 821,309 $ 788,942 $ 94,145 11 % $ 32,367 4 % Our reportable segments net revenue reported in constant currency(1) are as follows: For the year ended May 31, Change as reported in constant currency Change % Change (in thousands of U.S. dollars) 2026 2025 2026 vs. 2025 Beverage business 252,893 $ 240,595 $ 12,298 5 % Cannabis business 260,773 249,001 11,772 5 % Distribution business 304,728 271,228 33,500 12 % Wellness business 65,510 60,485 5,025 8 % Total net revenue $ 883,904 $ 821,309 $ 62,595 8 % Our geographic net revenue is, as follows: For the year ended May 31, Change Change (in thousands of U.S. dollars) 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 USA $ 242,390 $ 273,695 $ 233,141 $ (31,305 ) (11 )% $ 40,554 17 % Canada 215,661 212,860 243,722 2,801 1 % (30,862 ) (13 )% EMEA 445,698 323,350 296,450 122,348 38 % 26,900 9 % Rest of World 11,705 11,404 15,629 301 3 % (4,225 ) (27 )% Total net revenue $ 915,454 $ 821,309 $ 788,942 $ 94,145 11 % $ 32,367 4 % Our geographic net revenue in constant currency(1) is, as follows: For the year ended May 31, Change as reported in constant currency Change % Change (in thousands of U.S. dollars) 2026 2025 2026 vs. 2025 USA $ 242,390 $ 273,695 $ (31,305 ) (11 )% Canada 213,708 212,860 848 0 % EMEA 415,504 323,350 92,154 28 % Rest of World 12,302 11,404 898 8 % Total net revenue $ 883,904 $ 821,309 $ 62,595 8 % (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. 49 Our geographic capital assets are, as follows: For the year ended May 31, Change (in thousands of U.S. dollars) 2026 2025 2026 vs. 2025 USA $ 207,592 $ 200,003 $ 7,589 4 % Canada 245,799 267,458 (21,659 ) (8 )% EMEA 202,598 97,371 105,227 108 % Rest of World 24,236 3,601 20,635 573 % Total capital assets $ 680,225 $ 568,433 $ 111,792 20 % Beverage revenue Net revenue from our Beverage operations increased to $254.0 million for the fiscal year ended May 31, 2026, compared to net revenue of $240.6 million for the prior fiscal year ended May 31, 2025. Results for the current fiscal year include incremental net revenues of $51.1 million associated with the BrewDog Acquisition completed during the fourth fiscal quarter. Excluding the impact of the BrewDog Acquisition, the year-over-year decrease was primarily attributable to continued industry-wide challenges across the craft beer, spirits, and brewpub categories and broader competitive pressures, which resulted in lower volumes sold. Additionally, the decline was driven in part by margin‑focused actions, which reduced net revenue by approximately $16.6 million during the fiscal year. Lastly, the HD-D9 category was negatively impacted by recently enacted changes to the Farm Bill, which will restrict the future sale of our HD‑D9 beverages and, as a result, reduced net revenue by approximately $2.1 million during the fiscal year. 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 period and would have increased beverage revenue for the fiscal year ended May 31, 2025, by approximately $13.6 million. Cannabis revenue Cannabis revenue based on market channel is, as follows: For the year ended May 31, Change Change (in thousands of US dollars) 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 Revenue from Canadian medical cannabis $ 23,726 $ 24,998 $ 25,211 $ (1,272 ) (5 )% $ (213 ) (1 )% Revenue from Canadian adult-use cannabis 236,352 224,048 266,846 12,304 5 % (42,798 ) (16 )% Revenue from wholesale cannabis 7,318 18,207 25,340 (10,889 ) (60 )% (7,133 ) (28 )% Revenue from international cannabis 84,910 63,356 53,295 21,554 34 % 10,061 19 % Total cannabis revenue 352,306 330,609 370,692 21,697 7 % (40,083 ) (11 )% Excise taxes (83,964 ) (81,608 ) (97,894 ) (2,356 ) 3 % 16,286 (17 )% Total cannabis net revenue $ 268,342 $ 249,001 $ 272,798 $ 19,341 8 % $ (23,797 ) (9 )% Cannabis revenue based on market channel in constant currency(1) is, as follows: For the year ended May 31, Change as reported in constant currency Change % Change (in thousands of US dollars) 2026 2025 2026 vs. 2025 Revenue from Canadian medical cannabis $ 23,505 $ 24,998 $ (1,493 ) (6 )% Revenue from Canadian adult-use cannabis 234,365 224,048 10,317 5 % Revenue from wholesale cannabis 7,295 18,207 (10,912 ) (60 )% Revenue from international cannabis 78,899 63,356 15,543 25 % Total cannabis revenue 344,064 330,609 13,455 4 % Excise taxes (83,291 ) (81,608 ) (1,683 ) 2 % Total cannabis net revenue $ 260,773 $ 249,001 $ 11,772 5 % (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. 50 Revenue from Canadian medical cannabis: Gross revenue from Canadian medical cannabis decreased 5% to $23.7 million for the fiscal year ended May 31, 2026, compared to gross revenue of $25.0 million for the fiscal year ended May 31, 2025. On a constant currency basis, gross revenue from Canadian medical cannabis decreased to $23.5 million for the fiscal year ended May 31, 2026. The decrease in gross revenue from medical cannabis, on a constant currency basis, was primarily driven by a reduction in the Veterans Affairs Canada reimbursement ceiling from $8.50 to $6.00 per gram, effective April 1, 2026, as enacted under the Canadian federal government’s Budget 2025, which reduced revenue by approximately $0.8 million during the fiscal year. The remaining decrease was attributed to uninsured patient attrition to the adult-use recreational market. Revenue from Canadian adult-use cannabis: During the fiscal year ended May 31, 2026, our gross revenue from Canadian adult-use cannabis product increased 5% to $236.4 million, compared to revenue of $224.0 million for the prior fiscal year ended May 31, 2025. On a constant currency basis, our gross revenue from Canadian adult-use cannabis increased 5% to $234.4 million for the fiscal year ended May 31, 2026. The increase in gross adult-use revenue was primarily driven by a 28% increase in the traditional pre‑roll category, reflecting the successful launch of innovation SKUs, including Good Supply Double Dutchies. This growth was partially offset by a 4% decline in our largest category, the whole flower category, primarily due to the commencement of strain rotation within our cultivation program, which temporarily constrained supply. In addition, certain inventory was redirected to international markets, which would otherwise have generated approximately $3.9 million of revenue in the Canadian market. Notably, the Company has continued to invest in its cultivation footprint, including the decision to restart cultivation at its Quebec facility to support the growing demand in both the Canadian and international markets. Given the higher margins generally realized on international cannabis sales, the Company may, when advantageous, continue to allocate inventory to international markets, which could negatively impact Canadian adult‑use and wholesale cannabis revenue in future periods as the Company continues to scale its infrastructure. Revenue from wholesale cannabis: Gross revenue from wholesale cannabis decreased to $7.3 million for the fiscal year ended May 31, 2026, compared to revenue of $18.2 million for the prior fiscal year ended May 31, 2025. On a constant currency basis, gross revenue from wholesale cannabis for the fiscal year ended May 31, 2026 was $7.3 million. 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 or allocate it to international markets. Specifically, during the fiscal year ended May 31, 2026, wholesale cannabis revenue declined compared to the prior year periods as the Company strategically redirected product to other markets, resulting in a 53% decrease in wholesale gram equivalents sold, respectively. Revenue from international cannabis: Net revenue from international cannabis increased 34% to $84.9 million for the fiscal year ended May 31, 2026, compared to net revenue of $63.4 million for the fiscal year ended May 31, 2025. On a constant currency basis, given the strengthening of the Euro against the U.S. Dollar when compared to the prior fiscal year, net revenue from international cannabis increased 25% to $78.9 million. The increase in net revenue from international cannabis markets during the fiscal year, was primarily attributable to growth in the German medical cannabis market, which increased by $9.7 million as a result of an enhanced supply chain, increased distribution, and the receipt of previously backlogged permits. This growth was further supported by a $8.0 million increase in Poland, driven by patient adoption of an in‑person prescription model, and a $1.7 million increase in the United Kingdom through our targeted expansion into emerging markets and the Lyphe Acquisition. Despite increased gram equivalents sold, international cannabis revenue was negatively impacted by price compression of approximately $21.1 million. Notwithstanding this pricing pressure, international cannabis sales continue to generate higher margins than Canadian cannabis sales, and the Company remains focused on optimizing its product mix and geographic allocation to maximize profitability. Lastly, international cannabis revenue may fluctuate from quarter to quarter based upon the timing of the receipt of export/import permits as well as the timing of shipments from one quarter to the next. Distribution revenue Net revenue from Distribution operations increased 21% to $327.2 million for the fiscal year ended May 31, 2026, compared to net revenue of $271.2 million for the prior fiscal year ended May 31, 2025. On a constant currency basis, given the change in the Euro and Argentine Peso against the U.S. Dollar during the fiscal year, net revenue from Distribution was $304.7 million for the fiscal year ended May 31, 2026. The currency adjusted increase in Distribution revenue for the fiscal year was primarily driven by a focus on competitive pricing and product mix, as evidenced by a 6% increase in average selling price, and an 8% increase in units sold, reflecting greater emphasis on higher‑velocity SKUs, as well as favorable foreign exchange impacts. Wellness revenue Our Wellness net revenue increased to $65.9 million for the fiscal year ended May 31, 2026, compared to $60.5 million for the fiscal year ended May 31, 2025. On a constant currency basis for the fiscal year ended May 31, 2026, Wellness net revenue increased to $65.5 million. 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 $2.8 million of incremental revenue in the year. In addition, the acquisition of Blue Sky Hemp Venture’s customer list contributed to the growth of our ingredients sales channel with approximately $3.7 million of incremental revenue in the year. The remaining Wellness portfolio saw revenue decline of approximately $1.5 million primarily due to a shift in one of our supply agreements within the Club retailer channel. The Company is focused on improving performance through increased distribution, assortment optimization, and promotional activity across its Club and Retail channels. 51 Gross profit and gross margin Our gross profit and gross margin for the fiscal years ended May 31, 2026, 2025 and 2024 were as follows for our each of our operating segments: (in thousands of U.S. dollars) For the year ended May 31, Change % Change Change % Change Beverage 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 Net revenue $ 253,976 $ 240,595 $ 202,094 $ 13,381 6 % $ 38,501 19 % Cost of goods sold 162,743 147,591 113,522 15,152 10 % 34,069 30 % Gross profit 91,233 93,004 88,572 (1,771 ) (2 )% 4,432 5 % Gross margin 36 % 39 % 44 % (3 )% (8 )% (5 )% (11 )% Purchase price accounting step-up 2,150 1,610 4,602 540 34 % (2,992 ) (65 )% Adjusted gross profit (1) 93,383 94,614 93,174 (1,231 ) (1 )% 1,440 2 % Adjusted gross margin (1) 37 % 39 % 46 % (2 )% (5 )% (7 )% (15 )% Cannabis Net revenue 268,342 249,001 272,798 19,341 8 % (23,797 ) (9 )% Cost of goods sold 161,256 150,005 182,594 11,251 8 % (32,589 ) (18 )% Gross profit 107,086 98,996 90,204 8,090 8 % 8,792 10 % Gross margin 40 % 40 % 33 % 0 % 0 % 7 % 21 % Purchase price accounting step-up — — 7,628 — NM (7,628 ) (100 )% Adjusted gross profit (1) 107,086 98,996 97,832 8,090 8 % 1,164 1 % Adjusted gross margin (1) 40 % 40 % 36 % 0 % 0 % 4 % 11 % Distribution Net revenue 327,244 271,228 258,740 56,016 21 % 12,488 5 % Cost of goods sold 286,589 241,896 230,596 44,693 18 % 11,300 5 % Gross profit 40,655 29,332 28,144 11,323 39 % 1,188 4 % Gross margin 12 % 11 % 11 % 1 % 9 % 0 % 0 % Wellness Net revenue 65,892 60,485 55,310 5,407 9 % 5,175 9 % Cost of goods sold 44,425 41,247 38,879 3,178 8 % 2,368 6 % Gross profit 21,467 19,238 16,431 2,229 12 % 2,807 17 % Gross margin 33 % 32 % 30 % 1 % 3 % 2 % 7 % Total Net revenue 915,454 821,309 788,942 94,145 11 % 32,367 4 % Cost of goods sold 655,013 580,739 565,591 74,274 13 % 15,148 3 % Gross profit 260,441 240,570 223,351 19,871 8 % 17,219 8 % Gross margin 28 % 29 % 28 % (1 )% (3 %) 1 % 4 % Purchase price accounting step-up 2,150 1,610 12,230 540 34 % (10,620 ) (87 )% Adjusted gross profit (1) 262,591 242,180 235,581 20,411 8 % 6,599 3 % Adjusted gross margin (1) 29 % 29 % 30 % 0 % 0 % (1 )% (3 )% 52 (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) and are non-GAAP financial measures. See “Reconciliation of Non-GAAP Financial Measures to GAAP Measures” 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. 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 purchase price accounting valuation step-up) and adjusted gross margin is our Gross margin (adjusted to exclude purchase price accounting valuation step-up) and are both 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 without the impacts of the aforementioned adjusted items. 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. Beverage gross margin: Gross margin of 36% for the fiscal year ended May 31, 2026 decreased from 39% when compared to the fiscal year ended May 31, 2025. Adjusted gross margin of 37% decreased in the fiscal year ended May 31, 2026, from 39% in the fiscal year ended May 31, 2025. The change in the beverage gross margin and adjusted beverage gross margin for the fiscal year was driven by several factors, including our Craft Acquisition II, which historically has operated at a lower gross margin of approximately 25%, declining fixed overhead utilization as our volume levels relating to our legacy business 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 6.9% for the fiscal year compared to 4.5% in the prior year period, which negatively impacted margins and was partially offset by reductions in marketing expenditures. These impacts were partially offset by the inclusion of BrewDog, which generated adjusted gross margin of approximately 40% and favorably impacted overall beverage adjusted gross margin for the fiscal year. Cannabis gross margin: Gross margin and adjusted gross margin remained consistent during the fiscal year ended May 31, 2026 at 40% when compared to the fiscal year ended May 31, 2025. Although both cannabis net revenue and gross profit increased during the fiscal year, gross margin percentage remained largely unchanged. This was primarily due to price compression in international markets, which negatively impacted international cannabis revenue during the fiscal year by approximately $21.1 million, despite having increased the gram equivalents sold. Distribution gross margin: Gross margin increased to 12% for the fiscal year ended May 31, 2026, compared to 11% for the fiscal year ended May 31, 2025. The increase was primarily attributable to a favorable change in product mix, as evidenced by the increase in average selling price of approximately 6% during the fiscal year period, respectively, as well as initiatives undertaken to reduce input costs. Wellness gross margin: Gross margin increased to 33% for the fiscal year ended May 31, 2026, compared to gross margin of 32% for the fiscal year ended May 31, 2025. Gross margin remained relatively consistent period over period as strategic price increases largely offset unfavorable changes in sales mix. 53 Operating expenses For the year ended May 31, Change Change (in thousands of US dollars) 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 General and administrative $ 203,629 $ 167,324 $ 167,358 $ 36,305 22 % $ (34 ) (0 )% Selling 49,328 56,039 37,233 (6,711 ) (12 )% 18,806 51 % Amortization 19,585 88,616 84,752 (69,031 ) (78 )% 3,864 5 % Marketing and promotion 42,290 37,048 41,933 5,242 14 % (4,885 ) (12 )% Research and development 361 284 635 77 27 % (351 ) (55 )% Change in fair value of contingent consideration (15,000 ) — (15,790 ) (15,000 ) NM 15,790 (100 )% Impairment of intangible assets and goodwill — 2,096,139 — (2,096,139 ) (100 )% 2,096,139 NM Other than temporary change in fair value of convertible notes receivable — 21,661 42,681 (21,661 ) (100 )% (21,020 ) (49 )% Litigation costs, net of recoveries 3,902 17,347 8,251 (13,445 ) (78 )% 9,096 110 % Restructuring costs 13,113 34,283 15,581 (21,170 ) (62 )% 18,702 120 % Transaction costs (income), net 6,260 4,534 15,462 1,726 38 % (10,928 ) (71 )% Total operating expenses $ 323,468 $ 2,523,275 $ 398,096 $ (2,199,807 ) (87 )% $ 2,125,179 534 % 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 change in fair value of convertible notes receivable; litigation costs, net of recoveries; restructuring costs; and transaction costs (income), net. These costs decreased by $2,199.8 million to $323.5 million for the fiscal year ended May 31, 2026, compared to $2,523.3 million for the fiscal year ended May 31, 2025. These decreases were primarily attributable to $2,096.1 million of non‑cash impairments of goodwill and intangible assets and a $21.7 million other‑than‑temporary decrease in the fair value of the MedMen convertible note recorded in the prior year, which did not repeat in the current period. In addition, the fiscal year ended May 31, 2026 had lower amortization expense following the intangible asset impairment recorded during the fiscal year ended May 31, 2025, a $15.0 million gain related to the change in fair value of the Montauk contingent consideration, and lower selling and non‑recurring litigation, and restructuring costs. These decreases were partially offset by higher general and administrative, marketing and promotion, and transaction costs (income), net. Additionally results for the current fiscal year include incremental operating expenses of $28.7 million associated with the BrewDog Acquisition and Lyphe acquisition completed during the fourth fiscal quarter, which is discussed in further detail below: General and administrative costs For the year ended May 31, Change Change (in thousands of US dollars) 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 Salaries and wages $ 91,448 88,015 83,673 $ 3,433 4 % $ 4,342 5 % Office and general 42,171 28,314 28,460 13,857 49 % (146 ) (1 )% Stock-based compensation 45,940 24,289 31,769 21,651 89 % (7,480 ) (24 )% Insurance 9,792 11,843 12,586 (2,051 ) (17 )% (743 ) (6 )% Professional fees 4,238 4,765 5,345 (527 ) (11 )% (580 ) (11 )% Gain on sale of capital assets (509 ) 928 (4,198 ) (1,437 ) (155 )% 5,126 (122 )% Travel and accommodation 5,569 5,717 5,138 (148 ) (3 )% 579 11 % Rent 4,980 3,453 4,585 1,527 44 % (1,132 ) (25 )% Total general and administrative costs $ 203,629 $ 167,324 $ 167,358 $ 36,305 22 % $ (34 ) (0 )% 54 Salaries and wages increased by 4% to $91.4 million during the fiscal year ended May 31, 2026 primarily due to incremental salaries of $5.2 million associated with the BrewDog Acquisition and Lyphe acquisition completed during the fourth fiscal quarter and $2.6 million of merit increases. These increases were partially offset by $3.5 million of net terminations and a $1.9 million decrease in retention payments, which were $2.8 million for the current year compared to $4.7 million in the prior year. The remaining period-over-period change was primarily attributable to changes in estimates related to discretionary compensation accruals. Office and general increased by 49% to $42.2 million during the fiscal year ended May 31, 2026. The increase was driven by higher costs in the current year, including $5.8 million of incremental office and general expenses associated with the BrewDog Acquisition and Lyphe acquisition completed during the fourth fiscal quarter, $0.6 million of incremental costs from a full period of Craft Acquisition II, and a $0.7 million increase in bad debt provisions within the Distribution reporting segment. The increase also reflected the non-recurrence of a $5.6 million vendor credit and a $0.3 million property tax refund recorded in the prior year period. The Company recognized stock-based compensation expense of $45.9 million for the fiscal year ended May 31, 2026, compared to $24.3 million for the prior fiscal year period. Stock-based compensation expense is based on the time-based vesting schedules and varies according to the assumptions used in the vesting model. The increase in stock-based compensation was primarily due to the recognition of expense related to performance-based awards following the establishment and approval of their performance criteria during the second fiscal quarter. Because these awards were originally issued in fiscal 2024 but were not considered granted for accounting purposes until fiscal 2026, the current year expense reflects compensation attributable to employee service provided since the original award date, effectively resulting in the recognition of three fiscal years of expense in a single year. As a result, performance-based awards contributed approximately $23.2 million of stock-based compensation expense during the fiscal year ended May 31, 2026. Insurance expense decreased by 17% for the fiscal year ended May 31, 2026 to $9.8 million from $11.8 million for the prior fiscal year period. The decrease in insurance expense for the fiscal year ended May 31, 2026 was driven by lower premiums as a result of management’s decision to self-insure a portion of our property and casualty insurance. For the fiscal year ended May 31, 2026, insurance expense as a percentage of revenue improved 37 basis points compared to the prior year period reflecting improvements in insurance costs relative to business growth. Professional fees decreased by 11% to $4.2 million in the fiscal year ended May 31, 2026 from $4.8 million when compared to the prior fiscal year, which is a direct result of our cost savings initiatives. Rent expense increased by 44% for the fiscal year ended May 31, 2026 to $5.0 million from $3.5 million for the prior fiscal year period. The increase reflected incremental rent costs of $1.0 million associated with the BrewDog Acquisition and Lyphe acquisition completed during the fourth fiscal quarter, $0.8 million from a full period of Craft Acquisition II, and $0.2 million of annual rent increases, partially offset by a $0.5 million reduction related to exited leases. Rent expense is predominantly comprised of operating lease expense for our brew pubs and office spaces. Selling costs For the fiscal year ended May 31, 2026, the Company incurred selling costs of $49.3 million or 5.4% of net revenue as compared to $56.0 million or 6.8% of net revenue in the prior fiscal year. 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 was driven by lower freight costs in the beverage segment as a result of Project 420 cost-saving initiatives, which improved freight as a percentage of sales by approximately 144 basis points, and lower freight costs in the Canadian cannabis segment following contract renegotiations, which improved freight as a percentage of sales by approximately 210 basis points. The decrease was further supported by lower commission rates in the Canadian cannabis sales channels. These improvements were partially offset by $2.3 million of incremental fuel and freight surcharges incurred during the fourth fiscal quarter, primarily attributable to elevated global fuel prices and shipping disruptions resulting from the ongoing geopolitical conflict in the Middle East, as well as $2.3 million of incremental selling costs associated with the BrewDog Acquisition and Lyphe acquisition completed during the fourth fiscal quarter. Amortization The Company incurred non-production related amortization charges of $19.6 million for the fiscal year ended May 31, 2026, compared to $88.6 million in the prior fiscal year period based on depreciable capital and intangible assets useful lives. The decrease reflected a lower amortizable asset base following the impairment charges recognized during the fiscal year ended May 31, 2025, partially offset by $3.6 million of amortization expense related to assets acquired in connection with the BrewDog Acquisition and Lyphe acquisition completed during the fourth fiscal quarter of fiscal 2026. Marketing and promotion cost For the fiscal year ended May 31, 2026, the Company incurred marketing and promotion costs of $42.3 million, as compared to $37.0 in the prior fiscal year. The increase was driven by $3.9 million of incremental costs associated with the BrewDog Acquisition and Lyphe acquisition completed during the fourth fiscal quarter, a $3.0 million increase in the Distribution reporting segment consistent with higher sales, and a $1.0 million increase in the Cannabis reporting segment to support international growth. These increases were partially offset by a $1.5 million reduction in discretionary beverage marketing spend, excluding BrewDog, as Project 420 initiatives focused spending on more targeted marketing programs and profitability optimization. The remaining change was primarily attributable to global marketing and communications costs. Research and development Research and development costs were $0.4 million in the fiscal year ended May 31, 2026, compared to $0.3 million in the prior fiscal year. These relate to external costs incurred in connection with the development of new products. 55 Change in fair value of contingent consideration A portion of the total consideration to be paid in connection with the Company’s acquisition of Montauk Brewing Company (“Montauk”) was contingent upon the achievement by Montauk of certain financial measures as of December 31, 2025. In the event that Montauk achieved either the pre-determined sales volume target or EBITDA target, then $15.0 million of contingent consideration would be deemed earned and payable. If both the sales volume target and the EBITDA target were achieved, an additional $3.0 million would be deemed earned and payable for a total contingent consideration payment of $18.0 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 fiscal year ended May 31, 2026 as no contingent consideration obligation was payable. Impairment of intangible assets and goodwill The Company performed the annual impairment test during the fourth quarter ended May 31, 2026 and, as a result, 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. During the fiscal year ended May 31, 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, overall declines in the craft beer industry sector, and a change in the Company's discount rate, the Company recognized the following impairment charges: - Intangible assets. Non-cash impairment charges of $334.2 million related to customer relationships & distribution channel, $186.6 million related to licenses, permits & applications, which were considered indefinite-lived intangible assets and $327.1 million related to intellectual property, trademarks, knowhow & brands. See Note 8 (Intangible assets) for additional details. - Goodwill. Non-cash impairment charges of $1,070.0 million related to cannabis goodwill, $120.8 million related to beverage goodwill, $53.2 million related to wellness goodwill and $4.2 million related to distribution goodwill. See Note 10 (Goodwill) for additional details. - Deferred tax liabilities. These non-cash impairment charges were offset by an income tax recovery of $121.4 million, resulting in the corresponding reduction in deferred tax liabilities. See Note 12 (Income taxes and deferred income taxes) for additional details. Intangible asset impairments The Company performed the annual impairment test on its indefinite-life intangible assets, and for its finite-lived intangible assets, management assessed for asset specific indicators of impairment during the fourth quarter ended May 31, 2025, and 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, and a change in non-discretionary market inputs in the Company's discount rate, the Company recorded non-cash impairments of $334.2 million related to its finite-lived customer relationships & distribution channel, $186.6 million related to its licenses, permits & applications, which were considered indefinite-lived intangible assets and $327.1 million related to its finite-lived intellectual property, trademarks, knowhow & brands. This impairment charge resulted in a corresponding income tax recovery of $121.4 million, resulting in the corresponding reduction in deferred tax liabilities. In calculating the impairment charge, using an income approach, the Company used a discount rate of 10.00%-14.50%, a terminal growth rate of 2%, and an average revenue growth rate of 5%-30% over 5 years to correlate with the cash flows anticipated with the individual intangible assets that were assessed. A reasonably possible change in any of the inputs within the determination of fair value would not result in a material change to the impairment recorded. Goodwill impairments In the fiscal year ended May 31, 2025, the Company identified indicators of impairment based on a combination of factors, including a sustained decline in market capitalization, driven in part by uncertainty related to changes in U.S. and global economic conditions, including slower-than-anticipated progress in global cannabis legalization and continued declines in the craft beer industry. In addition, changes in non-discretionary market inputs, including increases in the Company’s discount rate, negatively impacted the estimated future cash flows of its reporting units. As a result, the Company concluded it was more likely than not that the fair value of certain reporting units was less than their carrying amounts as of May 31, 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 $1,070.0 million of cannabis goodwill, $120.8 million of beverage goodwill, $53.2 million of wellness goodwill and $4.2 million of distribution goodwill. The non-cash charge had no impact on the Company’s compliance with debt covenants at May 31, 2025, its cash flows or available liquidity. In the Company’s cannabis goodwill assessment, the Company used a discount rate of 14.50%, a terminal growth rate of 5%, and an average revenue growth rate of 34% over 5 years, based on an 65% and 25% 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 $133.8 million in impairment, a 1% decrease in the terminal growth rate would result in an additional $93.5 million in impairment, a 5% decrease in the average growth rate would result in an additional $23.4 million in impairment, a 5% decrease in the probability of EU cannabis legalization would result in an additional $44.0 million in impairment and a 5% decrease in the probability of US cannabis legalization would result in an additional $17.1 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, the Company used a discount rate of 10.00%, a terminal growth rate of 2%, and an average revenue growth rate of 2% over 5 years, which brought the remaining beverage goodwill balance to $nil. In the Company’s wellness goodwill assessment, the Company used a discount rate of 12.25%, a terminal growth rate of 2%, and an average revenue growth rate of 7% over 5 years, which brought the remaining wellness goodwill balance to $nil. In the Company’s distribution goodwill assessment, 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 During the fiscal year ended May 31, 2026, the Company no longer held MedMen Convertible Notes, and thus did not recognize any further changes in fair value. During the fiscal year ended May 31, 2025, the Company recognized an other-than-temporary change in fair value, which resulted in a non-cash expense of $21.7 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 fiscal year ended May 31, 2025, MedMen exited receivership and substantially all of its remaining assets were transferred to a new entity owned by MedMen’s secured creditors, including SH Acquisition. In connection with the foregoing, the Company disposed of its MedMen Convertible Note in exchange for an option to acquire a 68% membership interest in SH Acquisition for $1.00 upon U.S. federal cannabis legalization. See Note 11 (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. 56 Litigation costs Litigation costs of $3.9 million were expensed during the fiscal year ended May 31, 2026, compared $17.3 million in the prior fiscal year. Litigation costs include fees and expenses incurred in connection with defending and settling ongoing legacy inherited litigation matters, net of any judgments or settlement recoveries received from third parties. The decrease is related to period-to-period variability as litigation and settlement costs are non-recurring in nature. See Note 27 (Commitments and contingencies) for additional details. Restructuring costs In connection with the execution of our acquisition strategy and strategic transactions, the Company incurred non-recurring restructuring and exit costs associated with the integration efforts of these transactions. In connection with these efforts, during the fiscal year ended May 31, 2026, the Company incurred $13.1 million of restructuring charges compared to $34.3 million for the prior fiscal year period. All restructuring plans are approved at the executive level, and their associated expenses are recognized in the fiscal period in which the plan is committed. Within the Cannabis segment, during the fiscal year ended May 31, 2026, the Company incurred restructuring expenses totaling $6.3 million. These charges included $4.6 million associated with the restructuring of the Quebec facility to transition from vegetable cultivation to cannabis cultivation in response to increased global cannabis demand, $1.1 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 $0.4 million related to its Fort Collins, CO partially vacant warehouse that was previously held for sale and was divested during the fiscal year ended May 31, 2026. See Note 6 (capital assets). Within the Beverage segment, restructuring activities primarily related to Project 420, a business optimization plan designed to consolidate production, streamline operations, and improve the Company’s cost structure. Activities implemented under the plan included the closure and consolidation of certain brewery and related facilities, including Redhook, Terrapin, Atwater, Hop Valley, and Revolver, as well as costs incurred by the restructuring team established to execute the plan. Restructuring charges primarily consisted of employee termination severance and benefits, facility closure and exit costs, contract and other termination costs, costs associated with SKU rationalization activities, and other costs directly associated with the execution of the plan. During the fiscal year ended May 31, 2025, the Company accrued $8.5 million of restructuring charges related to these initiatives. During the fiscal year ended May 31, 2026, the related accrual was fully utilized. In addition, during the fiscal year ended May 31, 2026, the Company incurred $6.8 million of additional restructuring related expenses associated with these efforts, including costs related to facility closures, production consolidation, and other activities under Project 420. The Company expects these initiatives to be substantially completed by the end of fiscal 2027. Transaction (income) costs, net Transaction (income) costs, net, consists of acquisition related income and expenses, including legal fees, financial advisor and other third-party due diligence cost and expenses as well as any transaction related compensation. During the fiscal year ended May 31, 2026, transaction (income) costs, net increased 38% to $6.3 million from $4.5 million the prior fiscal year period as a result of higher transaction costs associated with the BrewDog Acquisition and Lyphe acquisition compared to the lower transaction costs associated with Craft Acquisition II in the prior fiscal year. 57 Non-operating income (expense), net For the year ended May 31, Change Change (in thousands of US dollars) 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 Change in fair value of convertible debenture payable $ — $ — $ (19,736 ) $ — NM $ 19,736 (100 )% Change in fair value of warrant liability (3,495 ) 2,161 (1,436 ) (5,656 ) (262 )% 3,597 (250 )% Foreign exchange gain (loss) 6,592 9,639 (4,086 ) (3,047 ) (32 )% 13,725 (336 )% (Loss) gain on long-term investments (4,533 ) (5,550 ) (217 ) 1,017 (18 )% (5,333 ) 2,458 % Unrealized loss on digital assets (326 ) — — (326 ) NM — NM Other non-operating (losses) gains, net 392 4,034 (12,367 ) (3,642 ) (90 )% 16,401 (133 )% Total non-operating income (expense) $ (1,370 ) $ 10,284 $ (37,842 ) $ (11,654 ) (113 )% $ 48,126 (127 )% For the fiscal year ended May 31, 2026, the Company recognized a change in fair value of its warrants, resulting in a loss of ($3.5) million compared to a gain of $2.2 million in the prior fiscal year, as a result of the change in our share price and the exercise price of the instrument. The Company recognized a gain of $6.6 million resulting from the changes in foreign exchange rates during the period compared to a gain of $9.6 million for the prior fiscal year period. The Company recognized a loss of $4.5 million on long-term investments, compared to a loss of $5.6 million for the prior period. The other non-operating (losses) gains, net were $0.4 million of gains for the fiscal year ended May 31, 2026, which was mainly comprised of a loss of $1.8 million on the change in fair value of assets held for sale related to the Fort Collins, CO partially vacant warehouse, as described in Note 6 (capital assets), offset by a gain of $2.0 million resulting from the exchange transaction of the TLRY 27 Note, as described in Note 16 (Convertible debentures payable). The other non-operating (losses) gains, net for the fiscal year ended May 31, 2025 were gains of $4.0 million and were mainly comprised of a $5.8 million gain resulting from the exchange transaction of the TLRY 27 Note, offset by a $1.0 million loss resulting from the downside protection from the Double Diamond Holdings note settlement. Reconciliation of Non-GAAP Financial Measures to GAAP Measures Adjusted EBITDA Adjusted EBITDA is a non-GAAP financial measure that does not have a 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, non-operating income (expense), net, purchase price accounting step-up on inventory, stock-based compensation, impairments, other than temporary change in fair value of convertible notes receivable, Project 420 business optimization, loss (gain) on sale of capital assets - non-operating facility, restructuring costs, transaction (income) costs, net, litigation costs net of recoveries, change in fair value of contingent consideration, and unrealized currency gains and losses. We believe that this presentation provides useful information to management, analysts and investors regarding certain additional financial and business trends relating to our 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 decisions. 58 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 the fiscal year ended May 31, 2026, adjusted EBITDA increased by $6.1 million to $61.1 million compared to $55.0 million in the prior fiscal year as we continue to execute on our strategic plan. For the year ended May 31, Change Change Adjusted EBITDA reconciliation: 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 Net loss $ (105,158 ) $ (2,181,356 ) $ (222,404 ) $ 2,076,198 (95 )% $ (1,958,952 ) 881 % Income tax (recovery) expense 17,098 (121,017 ) (26,616 ) 138,115 (114 )% (94,401 ) 355 % Interest expense, net 23,663 29,952 36,433 (6,289 ) (21 )% (6,481 ) (18 )% Non-operating income (expense), net 1,370 (10,284 ) 37,842 11,654 (113 )% (48,126 ) (127 )% Amortization 67,601 133,490 126,913 (65,889 ) (49 )% 6,577 5 % Stock-based compensation 45,940 24,289 31,769 21,651 89 % (7,480 ) (24 )% Change in fair value of contingent consideration (15,000 ) — (15,790 ) (15,000 ) NM 15,790 (100 )% Impairment of intangible assets and goodwill — 2,096,139 — (2,096,139 ) (100 )% 2,096,139 NM Other than temporary change in fair value of convertible notes receivable — 21,661 42,681 (21,661 ) (100 )% (21,020 ) (49 )% Project 420 business optimization 200 2,600 — (2,400 ) (92 )% 2,600 NM Loss (gain) on sale of capital assets - non-operating facility — 1,787 (3,987 ) (1,787 ) (100 )% 5,774 (145 )% Purchase price accounting step-up 2,150 1,610 12,230 540 34 % (10,620 ) (87 )% Facility start-up and closure costs — — 2,100 — NM (2,100 ) (100 )% Litigation costs, net of recoveries 3,902 17,347 8,251 (13,445 ) (78 )% 9,096 110 % Restructuring costs 13,113 34,283 15,581 (21,170 ) (62 )% 18,702 120 % Transaction costs (income), net 6,260 4,534 15,462 1,726 38 % (10,928 ) (71 )% Adjusted EBITDA $ 61,139 $ 55,035 $ 60,465 $ 6,104 11 % $ (5,430 ) (9 )% 59 Adjusted EBITDA should not be considered in isolation from, or as a substitute for, net loss. There are a number of limitations related to the use of Adjusted EBITDA as compared to net 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, are non-cash expenses 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; • 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; • Project 420 business optimization costs; • Loss (gain) on sale of capital assets - non-operating facility; • Restructuring charges; • Litigation costs, net of favorable recoveries and the third party fees associated with defending these claims, includes 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 purchase price accounting valuation step-up and adjusted gross margin is our Gross margin, adjusted to exclude purchase price accounting valuation step-up. Both 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. 60 Critical Accounting Policies and Significant Judgments and Estimates Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). A detailed discussion of our significant accounting policies can be found in Part II, Item 8, Note 3, “Summary of Significant Accounting Policies”, and the impact and risks associated with our accounting policies are discussed throughout this Form 10‑K and in the Notes to the Consolidated Financial Statements. We have identified certain policies and estimates as critical to our business operations and the understanding of our past or present results of operations related to (i) revenue recognition, (ii) valuation of inventory (iii) impairment of goodwill and indefinite-lived intangible assets, (iv) business combinations and goodwill, and (v) convertible debentures. These policies and estimates are considered critical because they had a material impact, or they have the potential to have a material impact, on our consolidated financial statements and because they require us to make significant judgments, assumptions or estimates. We believe that the estimates, judgments and assumptions made when accounting for the items described below were reasonable, based on information available at the time they were made. Actual results could differ materially from these estimates. (i) Revenue recognition Revenue is recognized when the control of the promised goods, through performance obligation, is transferred to the customer in an amount that reflects the consideration we expect to be entitled to in exchange for the performance obligations or as advisory services are provided. Payments received for the goods or services in advance of performance are recognized as a contract liability. Excise taxes remitted to tax authorities are government-imposed excise taxes on cannabis and beer. Excise taxes are recorded as a reduction of sales in net revenue in the consolidated statements of operations and recognized as a current liability within accounts payable and other current liabilities on the consolidated balance sheets, with the liability subsequently reduced when the taxes are remitted to the tax authority. In addition, amounts disclosed as net revenue are net of excise taxes, sales tax, duty tax, allowances, discounts and rebates. In determining the transaction price for the sale of goods, the Company considers the effects of variable consideration and the existence of significant financing components, if any. Some contracts for the sale of goods may provide customers with a right of return, volume discount, bonuses for volume/quality achievement, or sales allowance. In addition, the Company may provide in certain circumstances, a retrospective price reduction to a customer based primarily on inventory movement. These items give rise to variable consideration. The Company uses the expected value method to estimate the variable consideration because this method best predicts the amount of variable consideration to which the Company will be entitled. The Company uses historical evidence, current information and forecasts to estimate the variable consideration. The Company reduces revenue and recognizes a contract liability equal to the amount expected to be refunded to the customer in the form of a future rebate or credit for a retrospective price reduction, representing its obligation to return the customer’s consideration. The estimate is updated at each reporting period date. (ii) Valuation of inventory Refer to Part II, Item 8, Note 3, “Summary of Significant Accounting Policies” for further details on our inventory cost policy. At the end of each reporting period, the Company performs an assessment of inventory and records write-downs for excess and obsolete inventories based on the Company’s estimated forecast of product demand, production requirements, market conditions, regulatory environment, and spoilage. Actual inventory losses may differ from management’s estimates and such differences could be material to the Company’s statements of financial position, statements of loss and comprehensive loss and statements of cash flows. Changes in the regulatory structure, lack of retail distribution locations or lack of consumer demand could result in future inventory reserves. 61 (iii) Impairment of goodwill Goodwill is tested for impairment annually, or more frequently when events or circumstances indicate that impairment may have occurred. As part of the impairment evaluation, we may elect to perform an assessment of qualitative factors. If this qualitative assessment indicates that it is more likely than not that the fair value of the indefinite-lived intangible asset or the reporting unit (for goodwill) is less than its carrying value, a quantitative impairment test to compare the fair value to the carrying value is performed. An impairment charge is recorded if the carrying value exceeds the fair value. The assessment of whether an indication of impairment exists is performed at the end of each reporting period and requires the application of judgment, historical experience, and external and internal sources of information. We make estimates in determining the future cash flows and discount rates in the quantitative impairment test to compare the fair value to the carrying value. (iv) Business combinations and goodwill We use judgement in applying the acquisition method of accounting for business combinations and estimates to value contingent consideration, identifiable assets and liabilities assumed at the acquisition date. Judgement is used in determining whether an acquisition is a business combination or an asset acquisition. Judgment is also applied in determining the date on which control of certain acquired businesses was obtained, particularly in situations involving pending regulatory approvals, licensing transfers or other administrative matters, where management must evaluate all relevant facts and circumstances to determine the acquisition date for accounting purposes. We use judgement in applying the acquisition method of accounting for business combinations and estimates to value identifiable assets and liabilities at the acquisition date. Estimates are used to determine cash flow projections, including the period of future benefit, and future growth and discount rates, among other factors. In certain circumstances, management also considers whether economic obsolescence or other market participant assumptions should be reflected in the valuation of acquired assets, including where external economic factors, market conditions, asset utilization, or the transaction price indicate that replacement cost may not be representative of acquisition-date fair value. The values allocated to the acquired assets and liabilities assumed affect the amount of goodwill recorded on acquisition. Fair value of assets acquired and liabilities assumed is typically estimated using an income approach, which is based on the present value of future discounted cash flows. Significant estimates in the discounted cash flow model include the discount rate, rate of future revenue growth and profitability of the acquired business and working capital effects. The discount rate considers the relevant risk associated with the business-specific characteristics and the uncertainty related to the ability to achieve projected cash flows. These estimates and the resulting valuations require significant judgment. Management engages third party experts to assist in the valuation of material acquisitions. 62 (v) Convertible debentures The Company accounts for its convertible debentures in accordance with ASC 470-20 Debt with Conversion and Other Options, whereby the convertible instrument is initially accounted for as a single unit of account, unless it contains a derivative that must be bifurcated from the host contract in accordance with ASC 815-15 Derivatives and Hedging – Embedded Derivatives or the substantial premium model in ASC 470-20 Debt – Debt with Conversion and Other Options applies. Where the substantial premium model applies, the premium is recorded in additional paid-in capital. The resulting debt discount is amortized over the period during which the convertible notes are expected to be outstanding as additional non-cash interest expenses. Upon repurchase of convertible debt instruments, ASC 470-20 requires the issuer to allocate total settlement consideration, inclusive of transaction costs, amongst the liability and equity components of the instrument based on the fair value of the liability component immediately prior to repurchase. The difference between the settlement consideration allocated to the liability component and the net carrying value of the liability component, including unamortized debt issuance costs, would be recognized as gain (loss) on extinguishment of debt in the statements of loss and comprehensive loss. The remaining settlement consideration allocated to the equity component would be recognized as a reduction of additional paid-in capital in the statements of financial position. For convertible debentures with an embedded conversion feature that did not meet the equity scope exception from derivative accounting pursuant to ASC 815-15, the Company elected the fair value option under ASC 825 Fair Value Measurements. When the fair value option is elected, the convertible debenture is initially recognized at fair value on the statements of financial position and all subsequent changes in fair value, excluding the impact of the change in fair value related to instrument-specific credit risk are recorded in non-operating income (loss). The changes in fair value related to instrument-specific credit risk is recorded through other comprehensive income (loss). Transaction costs directly attributable to the issuance of the convertible debenture is immediately expensed in the statements of loss and comprehensive loss. New Standards and Interpretations Applicable Effective June 1, 2025 Refer to Part II, Item 8, Note 3, Significant Accounting Policies, of this Form 10-K for additional information on changes in accounting policies. 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. 63 For the Company’s short-term liquidity requirements, we are focused on generating positive cash flows 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. We may need to take on additional debt or equity financing arrangements in order to achieve this strategic plan 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 fiscal year ended May 31, 2026, the Company issued 6,777,224 shares under the ATM Program generating gross proceeds of $74.7 million. The Company paid $1.6 million in commissions and other fees associated with these issuances generating net proceeds of $73.1 million. The Company 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 in the U.S. and internationally in order to capitalize on expected regulatory advancements or expansion opportunities. As of our second fiscal quarter ended November 30, 2025, the ATM program was completed. On April 15, 2026, the Company entered into a separate ATM Program with Jefferies LLC, TD Securities (USA) LLC and Roth Capital Partners, LLC, pursuant to which the Company may offer and sell shares of the Company’s common stock, par value US$0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $180 million from time to time through the Agents, acting as sales agents, or directly to the Agents, acting as principals. During the fiscal year ended May 31, 2026, the Company issued 12,848,281 shares under this ATM Program, generating gross proceeds of $87.0 million at an average sales price of $6.77 per share. A substantial portion of these shares were issued on April 22 and April 23, 2026, during a period of increased trading activity and share price appreciation following developments related to the potential U.S. cannabis rescheduling process. The Company paid $2.1 million in commissions and other fees associated with these issuances generating net proceeds of $84.9 million. The Company 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 in the U.S. and internationally in order to capitalize on expected regulatory advancements or expansion opportunities. All current and prior year share amounts have been retrospectively adjusted to reflect the Reverse Stock Split, which became effective on December 2, 2025. 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. See Note 30 (Subsequent events), for additional transactions. The following table sets forth the major components of our statements of cash flows for the periods presented: For the year ended May 31, Change Change 2026 2025 2024 2026 vs. 2025 2025 vs. 2024 Net cash provided by (used in) operating activities $ (69,144 ) $ (94,599 ) $ (30,905 ) $ 25,455 (27 )% $ (63,694 ) 206 % Net cash provided by (used in) investing activities (55,800 ) (46,718 ) 128,349 (9,082 ) 19 % (175,067 ) (136 )% Net cash (used in) provided by financing activities 130,994 133,506 (75,187 ) (2,512 ) (2 )% 208,693 (278 )% Effect on cash of foreign currency translation 1,626 1,137 (549 ) 489 43 % 1,686 (307 )% Cash and cash equivalents, beginning of period 221,666 228,340 206,632 (6,674 ) (3 )% 21,708 11 % Cash and cash equivalents, end of period $ 229,342 $ 221,666 $ 228,340 $ 7,676 3 % $ (6,674 ) (3 )% Marketable securities 5,289 34,697 32,182 (29,408 ) (85 )% 2,515 8 % Cash, restricted cash and marketable securities(1) $ 234,631 $ 256,363 $ 260,522 $ (21,732 ) (8 )% $ (4,159 ) (2 )% (1) The cash, restricted cash and marketable securities presentation of our cash flows is a non-GAAP financial measure. See “Use of Non-GAAP Measures –Cash, Restricted Cash and Marketable Securities” above for a discussion of these Non-GAAP Measures. Cash flows from operating activities Net cash used in operating activities was $69.1 million for the fiscal year ended May 31, 2026, compared to $94.6 million for the prior fiscal year period. Excluding the impact of changes in working capital, operating cash flow was $18.2 million compared to cash used in operations of $32.0 million in the prior fiscal year, which was negatively impacted by the integration of Craft Acquisition I and II. Cash used in working capital was $87.3 million for the fiscal year ended May 31, 2026, compared to $62.6 million in the prior fiscal year. The current year use of working capital was primarily driven by the $43.7 million working capital impact of the BrewDog Acquisition, as well as inventory investments to support international cannabis growth. The significant components of the current year working capital change were as follows: - Accounts receivable. Accounts receivable increased by $66.4 million, including $51.7 million of trade receivables from sales generated by BrewDog following the acquisition. These receivables had not yet been collected as of May 31, 2026, as a result of the 60-90 day payment terms for BrewDog UK. The remaining $14.7 million increase in accounts receivable was primarily attributable to higher sales near the end of the fourth fiscal quarter in the international cannabis business and extended payment terms in certain international markets. - Prepaids and other current assets. Prepaid expenses and other current assets increased by $26.9 million, primarily driven by $20.7 million related to the BrewDog transaction. This included $14.4 million recorded in other receivables for amounts collected from customers and held in trust in connection with the BrewDog administration process, which were released subsequent to the fiscal year. - Inventory. Inventory increased by $13.4 million, including $1.1 million related to the BrewDog Acquisition, with the remaining increase primarily attributable to the international cannabis business as the Company managed permit delays and built inventory to support anticipated fiscal 2027 growth. - Accounts Payable. Accounts payable increased by $19.4 million, which partially offset the use of cash from other working capital items. The increase included $29.8 million of payables associated with the BrewDog Acquisition, partially offset by a $12.4 million decrease in payables primarily due to cash conversion terms in the beverage business and accelerated excise tax payments in Canada. Cash flows from investing activities Net cash used in investing activities was $55.8 million for the fiscal year ended May 31, 2026 compared to net cash used in investing activities of $46.7 million for the prior fiscal year period. The current year use of cash was primarily driven by $53.7 million of cash consideration paid for the BrewDog Acquisition, which was partially funded through proceeds from investments in marketable securities, compared to $18.0 million paid for Craft Acquisition II in fiscal 2025. 64 Cash flows from financing activities Net cash provided by financing activities was $131.0 million for the fiscal year ended May 31, 2026, compared to net cash provided in financing activities of $133.5 million for the prior fiscal year period and remained largely unchanged. Cash resources and working capital requirements The Company constantly monitors and manages its cash flows to assess the liquidity necessary to fund operations. As of May 31, 2026, the Company had $234.6 million of cash and cash equivalents on hand, restricted cash and marketable securities, compared to $256.4 million in cash and cash equivalents as of May 31, 2025. Working capital provides funds for the Company to meet its operational and capital requirements. As of May 31, 2026, the Company had working capital of $433.8 million. We historically financed our operations through the issuance of common stock, sale of convertible notes and revenue generating activities. While we believe we have sufficient cash to meet existing working capital requirements in the short term, we may need additional sources of capital and/or financing to meet our U.S. growth ambitions, expansion of our international operations and other strategic transactions. See Item 7A (Quantitative and Qualitative Disclosures About Market Risk). Contractual obligations We lease various facilities, under non-cancelable operating leases, which expire on various dates through September 2040: Operating Finance leases leases 2027 $ 16,724 $ 19,067 2028 15,588 19,067 2029 10,236 18,919 2030 6,671 18,683 Thereafter 13,200 148,357 Total minimum lease payments $ 62,419 $ 224,093 Imputed interest (15,694 ) (99,306 ) Obligations recognized $ 46,725 $ 124,787 Purchase and other commitments The Company has payments on long-term debt, refer to Note 15 (Long-term debt), convertible notes, refer to Note 16 (Convertible debentures payable), material purchase commitments and construction commitments as follows: Total 2027 2028 2029 2030 Thereafter Long-term debt repayment $ 139,178 18,160 41,708 49,833 3,677 25,800 Convertible debentures payable 88,000 — 88,000 — — — Material purchase obligations 59,562 48,256 9,568 551 579 608 Construction commitments 663 663 — — — — Total $ 287,403 $ 67,079 $ 139,276 $ 50,384 $ 4,256 $ 26,408 65 Except as disclosed elsewhere in this Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, there have been no material changes with respect to the contractual obligations of the Company during the year-to-date period except for those related to the Company’s acquisitions. Contingencies In the normal course of business, we may receive inquiries or become involved in legal disputes regarding various litigation matters. In the opinion of management, any potential liabilities resulting from such claims would not have a material adverse effect on our consolidated financial statements. See Note 27 (Commitments and contingencies) for additional details.