Overview

Aphria Inc., (APHQF) one of Canada’s lowest cost producers, produces, supplies and sells medical cannabis. Located in Leamington, Ontario, the greenhouse capital of Canada, Aphria is truly powered by sunlight, allowing for the most natural growing conditions available. Aphria is committed to providing pharma-grade medical cannabis, superior patient care while balancing patient economics and returns to shareholders.

Aphria is the first public licenced medical cannabis producer to report positive cash flow from operations and the first to report positive earnings in consecutive quarters.

Pure Natures Wellness (PNW), a wholly-owned subsidiary of the Company, is licenced to produce and sell medical marijuana under the provisions of the Access to Cannabis for Medical Purposes Regulations (“ACMPR”). PNW received its licence to produce and sell medical marijuana on November 26, 2014, followed by its licence to sell cannabis extracts on August 18, 2016. PNW’s operations are based in Leamington, Ontario. The Leamington greenhouse facility provides Aphria with the opportunity to be a scalable low cost producer of medical marijuana.

The Company is focused on producing and selling medical marijuana and its derivatives through a two-pronged growth strategy, including both retail sales and wholesale channels. Retail sales are primarily sold through Aphria’s online store as well as telephone orders. Wholesale shipments are sold to other ACMPR Licenced Producers

Capacity

INCREASE IN CAPACITY EXPECTATIONS The Company continues to refine and improve its industry leading greenhouse agricultural growing practices, combined with unique engineering changes embedded in both fully funded Part III and Part IV expansions, presently underway. Management believes that once full crop rotation has been attained after Part IV expansion is complete, annualized capacity will exceed 100,000 kilograms. Supporting management’s revised capacity projections are recent yield improvements resulting from the introduction of new lighting strategies, growing techniques and leveraging other “unique to greenhouse” strengths.

As a result of the above, the Company amended its previously reported capacity expectations for its expansion projects. The Company believes that the capacity after full crop rotation in Part II will increase from 8,000 kgs to 9,000 kgs annualized, in Part III it will increase from 22,000 kgs to 30,000 kgs annualized and in Part IV it will increase from 75,000 kgs to 100,000 kgs annualized.

HEALTH CANADA APPROVAL RECEIVED FOR PART II EXPANSION On May 15, 2017, the Company announced that Health Canada approved a license amendment that provides Aphria with additional production space of 57,000 square feet, as part of its Part II expansion at its facility in Leamington, Ontario. The announcement indicated that this would more than triple Aphria’s production capacity of medical cannabis from 2,600 kgs annually to 8,000 kgs annually. The 8,000 kgs annual capacity was subsequent increased to 9,000 kgs annually as discussed in the preceding paragraph. The first crop cultivated and produced at the Part II expansion will be available for sale in the middle of August.

INVESTMENT IN SECURECOM MOBILE INC. On November 23, 2016, Aphria invested $200,000 in SecureCom Mobile Inc. (“SecureCom”) via an unsecured convertible debenture. The debenture bore interest at 12% and was convertible into equity at $0.05 per share, and included the right to a warrant for each share of equity on conversion, priced at $0.08. On March 31, 2017, the Company exercised its conversion rights under the debenture and received 4,000,000 shares and 4,000,000 warrants priced at $0.08. Concurrently, the Company exercised its warrants at a cost of $320,000 and received an additional 4,000,000 shares. As a result of these transactions, Aphria owns 8,000,000 shares in SecureCom at a cost of $520,000.

INVESTMENT IN DFMMJ INVESTMENTS, LTD. On April 5, 2017, the Company announced it would invest $25 million into DFMMJ Investments, Ltd. (“DFMMJ”), which would acquire all or substantially all of the assets of Chestnut Hill Tree Farm LLC, through its subsidiary DFMMJ Investments, LLC, and subsequently amalgamate into a subsidiary of SecureCom Mobile Inc., a public company listed on the Canadian Securities Exchange, as part of a business combination (the “Business Combination”). As part of the series of transactions, Aphria agreed to license its Aphria Know-How System to DFMMJ. The funds, when combined with an additional $35 million raised in a brokered private placement led by Clarus Securities Inc., would be used for the launch of its US expansion strategy in an entity to be renamed Liberty Health Sciences Inc. (“Liberty”) that will operate in the United States under the brand “Aphria USA”. Also as part of the transaction, Aphria has agreed, to license its medical brand to DFMMJ, in exchange for a perpetual 3% royalty on all sales of cannabis and related products. Once the business combination is completed in July, the Company will own approximately 37.6% of the issued and outstanding common shares of Liberty

In the recent development on December 4, 2017 Aphria has entered into an agreement to become a medical cannabis supplier to Shoppers Drug Mart. Under the terms of the agreement the Company will supply Aphria branded medical cannabis products. Subject to Health Canada’s approval of Shoppers Drug Mart’s application to be a licensed producer, the products will be sold online, as Canadian regulations currently restrict the sale of medical cannabis in retail pharmacies.