Weighted

Expiry

Number of

average

Type of warrant

Classification

date

warrants

price

Warrant

Equity

September 26, 2021

166,000

3.14

Warrant

Equity

January 30, 2022

5,828,651

9.26

Warrant

Liability

March 17, 2025

6,209,000

5.95

12,203,651

7.41

As part of the Arrangement, Aphria’s 2016 Warrants (the 200,000 warrants issued by Aphria expiring September 26, 2021) were exchanged for 166,000 Replacement Warrants (warrants to purchase Tilray shares pursuant to the Plan of Arrangement), expiring September 26, 2021.

As part of the Arrangement, Aphria’s all 2020 Warrants (the 7,022,472 warrants issued by Aphria expiring January 30, 2022), ceased to represent a warrant to acquire Aphria shares and instead represent a right to receive 5,828,651 Tilray shares in accordance with their term.

As part of the Arrangement, all outstanding Tilray Warrants which expire on March 17, 2025 remain outstanding without change to any of their terms. The warrants contain anti-dilution price protection features, which adjust the exercise price of the warrants if the Company subsequently issues common stock at a price lower than the exercise price of the warrants. In the event additional warrants or convertible debt are issued with a lower and/or variable exercise price, the exercise price of the warrants will be adjusted accordingly. There were no triggering events during the year ended May 31, 2021. These warrants are classified as liabilities as they are to be settled in registered shares, and the registration statement is required to be active, unless such shares may be subject to an applicable exemption from registration requirements. The holders, at their sole discretion, may elect to affect a cashless exercise, and be issued exempt securities in accordance with Section 3(a)(9) of the 1933 Act. In the event the Company does not maintain an effective registration statement, the Company may be required to pay a daily cash penalty equal to 1% of the number of shares of common stock due to be issued multiplied by any trading price of the common stock between the exercise date and the share delivery date, as selected by the holder. Alternatively, the Company may deliver registered common stock purchased by the Company in the open market. The Company may also be required to pay cash if it does not have sufficient authorized shares to deliver to the holders upon exercise.

	May 31, 2021				May 31, 2020
			Weighted					Weighted
	Number of		average		Number of			average
	warrants		price		warrants			price
Outstanding, beginning of the year		5,994,651	$	8.91		1,903,024		$	12.01
Exercised during the year		—		—		(636,089	)		1.47
Issued during the year		6,209,000		5.95		5,828,652			9.08
Cancelled during the year		—		—		—			—
Expired during the year		—		—		(1,100,936	)		19.46
Outstanding, end of the year		12,203,651	$	7.41		5,994,651		$	8.91

The Company estimated the fair value of the warrant liability at May 31, 2021 at $12.59 per warrant using the Black Scholes pricing model (Level 3) with the following weighted-average assumptions:

Risk-free interest rate		0.90	%
Expected volatility		70	%
Expected term	4.3 years
Expected dividend yield		—	%
Strike price	$	5.95
Fair value of common stock	$	16.67

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