2015 - aphria.ca · VII $499,890 $51,540 $950,740 Q3 2015 Q4 2015 Q1 2016 “ Beyond the foundation of regulatory standards, Aphria believes that processes and procedures need to

2015Annual Report

For the year ended May 31, 2015

I I I

PAGE

01• • • • • • • • • • • • • • • • • • • • • • Chief Executive Officer Message

PAGE

02 • • • • • • • • • • • • • • • • • • • • • • Health Canada Market Data

PAGE

04• • • • • • • • • • • • • • • • • • • • • • Officers and Directors

PAGE

10• • • • • • • • • • • • • • • • • • • • • • CompanyOverview

PAGE

11 • • • • • • • • • • • • • • • • • • • • • • Highlights

PAGE

12 • • • • • • • • • • • • • • • • • • • • • • Recent Developments

PAGE

06• • • • • • • • • • • • • • • • • • • • • • StaffMembers

PAGE

08• • • • • • • • • • • • • • • • • • • • • • Management’s Discussion & Analysis

PAGE

09• • • • • • • • • • • • • • • • • • • • • •Notice Concerning Forward-looking Statements

PAGE

13 • • • • • • • • • • • • • • • • • • • • • • Selected Financial Information

PAGE

20 • • • • • • • • • • • • • • • • • • • • • • Disclosure of Outstanding Share Data

PAGE

21 • • • • • • • • • • • • • • • • • • • • • • Risk Factors

V

At Aphria, our talented and dedicated researchers and staff strive to improve the lives of countless patients. Our research and scientific knowledge allows for constant growth and production of quality products.

Number of Registered Patients

10

1050

730

427

24735

Dec 2014 Feb 2015Mar 2015

Apr 2015

May 2015

Jan 2015

V I I

$499,890

$51,540

$950,740

Q3 2015 Q4 2015 Q1 2016

“ Beyond the foundation of regulatory standards, Aphria believes that processes and procedures need to be established and technology needs to be adopted to ensure utmost quality.”

Gary Leong CHIEF SCIENTIFIC OFFICER

Sales ByQuarter

1

“ I am confident in our vision for Aphria as we chart our way through a future full of possibilities.”

Vic Neufeld MBA, CPA, CEO

It was a beautiful spring day in late May 2014 as I was driving to the Aphria greenhouse facility in Leamington, Ontario. It was my first day as CEO, and my mind was consumed with many exciting ideas and strategies.

I had recently completed a 21 year tenure as the CEO of Canada’s largest nutraceutical company and was ready for my next career challenge. However, I remained somewhat reserved and uncertain of how the future would unfold for this relatively new industry.

Aphria was in its infancy and the Canadian medical cannabis industry had undergone a significant regulatory change under Health Canada’s Marihuana for Medical Purposes Regulations just two months prior. At the time, thirteen other companies had become approved Licensed Producers, with several already publicly traded or in the midst of going public.

As we planned for our “go-to-market” strategies, Aphria immediately adopted the profile of a pharmaceutical company. We needed to differentiate ourselves from other Licensed Producers and combat the stigma attached to cannabis. And so, with a quality-minded philosophy, we started to execute on this model. Our cannabis strains were named after Canadian lakes rather than using their street nicknames, and we developed Standard Operating Procedures and stringent quality requirements to produce high quality products.

A year later, I am proud of Aphria’s many accomplishments. We have built a solid, passionate team that excels in Production, Quality and Patient Care. Our products are 100% greenhouse grown and our advanced growing techniques leverage the many benefits of natural sunlight in our climate controlled greenhouses. The agricultural skills and experience of Aphria’s co-founders, together with our Master Growers and Quality team, have proven the viability of growing medical cannabis in a greenhouse. Today, due to our greenhouse growing advantages, Aphria is able to maintain lower costs of production and retail pricing flexibility.

Thank you for your continued support and interest in Aphria. We are well positioned to continue our growth story, and now after many months of driving to the Leamington greenhouse facility, I am confident in our vision for Aphria as we chart our way through a future full of possibilities.

- Vic Neufeld President, Chief Executive Officer and Director

C H I E F E X E C U T I V E O F F I C E R M E S S AG E

2015 A P H R I A I N C . A N N UA L R E P O R T

3

APH

Operating Burn Cost as % of Revenue

$2,000,000

$1,500,000

$1,000,000

$500,000

$

Industry Average

Health Canada Market Data Based on market data, overall there is sufficient supply of marijuana for medical purposes to meet the current access needs of registered clients. Please note that amounts produced do not reflect the full production capacity authorized to licensed producers.

Operating Burn and as a Percentage of Revenue

OPE

RATI

NG

BU

RN

1 Changes in inventories may be a result of amounts of marijuana for medical purposes sold, produced, destroyed and imported.

200.0%

150.0%

100.0%

50.0%

0.0%

COST

AS

% O

F RE

VEN

UE

Source: Company reports, Dundee Capital Markets

Marihuana for Medical Purposes Regulations market data

April 1, 2014 to

June 30, 2014

July 1, 2014 to

September 30, 2014

October 1, 2014 to

December 31, 2014

January 1, 2015 to

March 31, 2015 Total

Amount of marijuana for medical purposes produced during quarter (kilograms)

1,020 1,435 1,809 1,786 6,049

Amount of marijuana for medical purposes sold to clients (kilograms)

408 596 789 979 2,771

Amount of marijuana for medical purposes in licensed producers' inventories at end of quarter (kilograms)1

1,134 2,021 2,994 4,810 4,810

Average amount of marijuana for medical purposes authorized per client (grams/day)

4 4 4 4 4

Average amount of marijuana for medical purposes per client shipment (grams/day)

1 1 1 1 1

Total number of clients registered at end of quarter

7,914 12,409 15,545 18,512 18,512

5

“ Government and regulatory bodies set the baseline standards for medicines like medical marijuana. These standards are generally the bare minimum needed to ensure adequate product. Aphria believes adequate is not good enough.”

Gary Leong CHIEF SCIENTIFIC OFFICER

O F F I C E R S A N D D I R E C TO R S


COLE CACCIAVILLANI Chief Operating Officer and Director

Cole Cacciavillani, Aphria’s co-chair and founder, is an industrial engineer with 35 years of experience in the agricultural and greenhouse industry. Cole has accumulated expertise gained over generations of how to best utilize nature’s light and organic properties combined with proprietary growing techniques and technologies produces a superior, safe and cost effective product. Cole sits on a number of charitable and associative boards including serving as: Chairman of the Board for Leamington Memorial District Hospital as well as serving on the Hospital’s Foundation Board.

JONATHAN LEONG, CPA, CA, CBV

Chief Financial Officer

Jonathan Leong has been involved in a number of public and private market transactions, including business acquisitions and reverse take-overs, for both domestic and international entities. Mr. Leong is a Chartered Professional Accountant, Chartered Accountant and Chartered Business Valuator with experience working in a variety of financial reporting, audit, advisory, M&A and valuation engagements. Mr. Leong articled with Grant Thornton LLP and obtained his Master of Accounting from the University of Waterloo.

MMPR

APR 2014

GARY LEONG Chief Scientific Officer

Gary Leong, Aphria’s Chief Scientific Officer, has a personal background in quality assurance, quality control, quality system audits, international and domestic regulatory affairs and product research and development. Gary’s commitment to research and scientific knowledge of the medical marijuana industry allows us here at Aphria to produce a cost effective and quality product.

Gary’s educational background began with a Bachelor of Science in Chemistry and has taken him most recently to an MBA in Quality Management from City University of Bellevue Washington. Gary is currently affiliated with The Life Sciences Working Team of Windsor-Essex Economic Development Corporation. In the past, he was a member of the Natural Health Products Directorate Program Advisory Committee and a board member of the Ontario Ginseng Innovation and Research Consortium.

JOHN CERVINI Chief Agronomist Officer and Director

John Cervini, Aphria’s co-Chair and founder, comes from fourth generation growers in southwestern Ontario with hydroponic agricultural experience. Together with his father and brother, John helped established Lakeside Produce, one of North America’s leading sales and marketing companies selling fresh produce from Canada to multinational retailers throughout North America. John is a leading innovator in greenhouse growing technology and has also overseen greenhouse expansion to Carpinteria, California and Guadalajara, Mexico.

DENNIS STAUDT, CPA, CA Director

Dennis Staudt, Director, has over 35 years experience providing business advice to private companies in Southwestern Ontario, having spent most of his career with PricewaterhouseCoopers LLP (“PwC”), including 22 years as a partner in the Audit and Assurance Group. Prior to being admitted to partnership, Dennis spent almost two years with PwC Germany in their Duesseldorf office.

DR. PHILIP WADDINGTON Director

Dr. Philip Waddington, Director is a trained naturopathic physician and a leader in the field of regulating natural health products. From January 2000 to August 2008. Dr. Waddington served as the inaugural Director General of the Natural Health Products Directorate (NHPD) of Health Canada.

CARL MERTON, CPA, CA, FCBV Director

Carl Merton, Director, has over 20 years of financial and business experience, having spent almost 12 years combined with Ernst & Young LLP and KPMG LLP prior to serving as Vice-President, Special Projects at Atlas Tube Canada ULC and his current position as Chief Financial Officer of Reko International Group Inc. (“Reko“) (TSX VENTURE:REK) since October 2007.

VIC NEUFELD, CPA, CA

President, Chief Executive Officer and Director

Vic Neufeld is the President and Chief Executive Officer of Aphria. Vic is the former CEO of Jamieson Laboratories (“Jamieson”) Canada’s largest manufacturer and distributor of natural vitamins, minerals, concentrated food supplements, herbs and botanical medicines.

Vic brings 15 years experience as a chartered accountant and partner with Ernst & Young and 21 years leading Jamieson. When Vic began his career with Jamieson in 1993, the top five leading nutrition brands each had 7% market share respectively. Under Vic’s leadership, Jamieson outpaced the competition and increased its market share to 27%. During his tenure with Jamieson, Vic led the company from $20 million in annual sales to over $250 million and expanded the company’s distribution network to over 40 countries, building Jamieson to a globally recognized brand name.

7

S TA F F M E M B E R S

9

Full MMPR License Granted

NOV 2014

N OT I C E CO N C E R N I N G F O R WA R D - LO O K I N G S TAT E M E N T S

Notice Concerning Forward-looking Statements

This MD&A contains forward-looking statements with

respect to expected financial performance, strategy and

business conditions. The words “forecast”, “future”, “could”,

“enable”, “potential”, “contemplate”, “believe”, “anticipate”,

“estimate”, “plan”, “expect”, “intend”, “may”, “project”, “will”,

“would” and similar expressions are intended to identify

forward-looking statements, although not all forward-

looking statements contain these identifying words.

These statements reflect management’s current beliefs

with respect to future events and are based on information

currently available to management. Forward-looking

statements involve significant known and unknown risks

and uncertainties. Many factors could cause actual results,

performance or achievement to be materially different

from any future forward-looking statements. Factors that

may cause such differences include, but are not limited

to, general economic and market conditions, investment

performance, financial markets, legislative and regulatory

changes, technological developments, catastrophic events

and other business risks. These forward-looking statements

are as of the date of this MD&A and the Company

and management assume no obligation to update or

revise them to reflect new events or circumstances

except as required by securities laws. The Company and

management caution readers not to place undue reliance

on any forward-looking statements, which speak only as

of the date made.

Some of the specific forward-looking statements in this

MD&A include, but are not limited to, statements with

respect to the following:

• the intended expansion of the Company’s facilities and

receipt of approval from Health Canada to complete

such expansion;

• the expected growth in the number of patients using

the Company’s medical marijuana; and

• the anticipated future gross margins of the

Company’s operations.

Management’s Discussion & Analysis

This management discussion and analysis

(“MD&A”) of the financial condition and results

of operations of Aphria Inc., (the “Company” or

“Aphria”), is for the year ended May 31, 2015.

It is supplemental to, and should be read in

conjunction with the Company’s consolidated

financial statements and the accompanying

notes for the year ended May 31, 2015, and

the management information circular dated

October 28, 2014. This MD&A is prepared as of

September 8, 2015.

The Company’s financial statements are

prepared in accordance with International

Financial Reporting Standards (“IFRS”). All

amounts presented herein are stated in

Canadian dollars, unless otherwise indicated.

M A N AG E M E N T ’S D I S C U S S I O N & A N A LY S I S


NO CROP FAILURES

17HARVEST TO DATE

11

APH Starts Trading on TSXV

DEC 2014


H I G H L I G H T S

Highlights

On November 26, 2014, Aphria received its license from Health Canada to cultivate and sell marijuana under the MMPR. Aphria is currently licensed to produce and sell 700 kilograms of medical marijuana until September 24, 2015. Soon thereafter, the Company completed its reverse acquisition transaction with Black Sparrow and began trading on the TSX-V under the ticker symbol “APH”. Since receiving its license, Aphria has grown its patient base to 1,050 by May 31st, 2015 and over 2,200 registered patients as of the date of this MD&A.

To expand patient reach further, Aphria has entered into agreements with two national organizations committed to helping first responders and veterans deal with chronic ailments. Each of the agreements has a three-year term. These recently engaged go-to-market sales platforms are currently providing Aphria with an accelerated rate of patient registration requests.

In addition, the Company was successful in amending its license with Health Canada to allow for wholesale shipping of medical marijuana plant cuttings as well as medical marijuana in dried bud form earlier in the year.

Aphria has already completed several sales through its wholesale strategy and based on current costs, management expects the wholesale shipment strategy to deliver, on average, adjusted gross margins in excess of fifty percent.

In order to keep up with anticipated demand, Aphria’s board of directors approved a two-phase expansion. The initial expansion involves the retrofit of three existing greenhouses adjacent to the current facilities for an additional 20,000 square feet, budgeted at approximately $1 million, or $50 per square foot. Following completion of construction (which is nearing completion as at the date of this MD&A) and the receipt of various required Health Canada approvals, Aphria expects to have total annualized growing capacity of approximately 2,500 kilograms.

Company Overview

Aphria Inc. was incorporated under the Business Corporations Act (Alberta) on June 22, 2011 as Black Sparrow Capital Corp. (“Black Sparrow”) and was continued in Ontario on December 1, 2014. On December 2, 2014, Black Sparrow, a Capital Pool Company, completed its qualifying transaction with PNW. For further information on this transaction, please refer to the management information circular dated October 28, 2014. The Company’s common shares are listed under the symbol “APH” on the TSX Venture Exchange (“TSX-V”).

Pure Natures Wellness Inc. d/b/a Aphria (“PNW”), a wholly-owned subsidiary of the Company, is licensed to produce and sell medical marijuana under the provisions of the Marihuana for Medical Purposes Regulations (“MMPR”). PNW received its license to produce and sell medical marijuana on November 26, 2014. 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 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 MMPR licensed producers.

Additional information relating to the Company is available on SEDAR at www.sedar.com.

CO M PA N Y O V E R V I E W

TARGET HARVEST OF

45-50 kgTWICE A MONTH

http://www.sedar.com

13

First Retail Shipment

DEC 2014

S E L E C T E D F I N A N C I A L I N F O R M AT I O N


Recent Developments

On June 11, 2015, the Supreme Court of Canada released its decision on R v. Smith, 2015 SCC 34. As a result of the Supreme Court of Canada decision, individuals authorized to possess marijuana under the MMPR and those falling under the terms of a court injunction (for example, Allard injunction) may now possess marijuana derivatives for their own use. In order to eliminate uncertainty around a legal source of supply of marijuana, Health Canada has taken the immediate step of issuing a section 56 exemption under the Controlled Drugs and Substances Act (“CDSA”), allowing licensed producers to produce and sell cannabis oil and fresh marijuana buds and leaves in addition to dried marijuana (plant material that can be used to propagate marijuana will not be permitted to be sold by licensed producers to clients). The role of healthcare practitioners in authorizing marijuana for medical purposes does not change.

The Section 56 exemption under the CDSA enables licensed producers to provide a legal source of cannabis oil and fresh marijuana buds and leaves. This exemption, effective immediately, sets out the strict terms and conditions with which licensed producers must comply. These build on the regulatory requirements set out in the MMPR.

In August, Aphria received authorization from Health Canada under the section 56 exemption to begin the production of oil extracts from cannabis. In response to these changes, Aphria has commenced the building of a research & development laboratory and related advanced equipment at its Leamington, Ontario facility. This expansion is in addition to the two-phase expansion described above and will provide Aphria the opportunity to diversify into marijuana oil extracts. This expansion is budgeted at approximately $1.7 million, is expected to be funded by cash on hand, with the expansion remaining subject to Health Canada approval. In total, the initial phase expansion and research and development laboratory are expected to cost approximately $2.7-2.9 million.

Aphria has also entered into a sponsorship agreement with The Arthritis Society to provide $100,000 for medical marijuana research and education programs. With this support, The Arthritis Society will investigate medical cannabis treatment benefits in arthritis pain and disease management and develop medical cannabis educational resources for Canadians living with arthritis.

R E C E N T D E V E LO P M E N T S

Selected Financial Information

SELECTED ANNUAL FINANCIAL INFORMATION

Year ended May 31/15

($)

Thirteen monthsended May 31/14

($)

Year endedApr 30/13

($)

Revenue 551,430 - -

Net loss 6,543,444 1,566,637 608,844

Net loss per share (basic and diluted) 0.14 0.07 5.71

Total assets 14,292,571 1,739,251 14,970

Long-term liabilities - - -

Working capital 9,390,844 (3,741,777) (623,794)

Dividends per share - - -

SELECTED QUARTERLY FINANCIAL INFORMATION

Q4-2015May 31/15

$

Q3-2015Feb 28/15

$

Q2-2015Nov 30/14

$

Q1-2015Aug 31/14

$

Q4-2014May 31/14

$

Q3-2014Feb 28/14

$

Q2-2014Nov 30/13

$

Q1-2014Aug 31/13

$

Revenue 499,890 51,540 - - - - - -

Net loss (481,380) (3,103,111) (1,358,849) (1,600,104) (783,415) (301,884) (228,267) (253,071)

Net loss per share (basic and diluted) (0.01) (0.06) (0.04) (0.04) (0.03) (0.01) (0.01) (0.03)

The Company obtained its MMPR license to produce and sell on November 26, 2014, with sales commencing shortly thereafter. The Company recognized listing costs of $2,708,031 in the third quarter of 2015, $314,037 in the second quarter of 2015, and $256,000 in the first quarter of 2015.

15

First Wholesale Shipment of Cuttings

First Wholesale Shipment of

Cuttings

FEB 2015


(iii) Change in biological assets is part of the Company’s cost of sales due to IFRS standards relating to agriculture and biological assets (i.e. living plants or animals). This line item currently represents the change in fair value in biological assets (medical marijuana) during the period. The change in biological assets for the year ended May 31, 2015 was a $997,711 gain (2014 - $nil). There were no changes recognized prior to receiving the full license under the MMPR.

Cost of sales was a recovery of $243,421 for the year ended May 31, 2015 versus costs of $463,343 in 2014. Gross profit for the year ended May 31, 2015 was $794,851 (2014 – negative $463,343).

Management believes the use of an adjusted gross profit and adjusted gross margin currently provides a better representation of performance by excluding non-cash fair value metrics required by IFRS. The following is the Company’s adjusted gross profit and adjusted gross margin as compared to IFRS for the year:

Year ended May 31, 2015


IFRS Adjustments Adjusted

Revenue $ 551,430 $ - 551,430

Cost of sales:

Cost of goods sold 433,262 (213,690) 219,572

Pre-distribution growing costs 321,028 (321,028) -

Change in biological assets (997,711) 997,711 -

(243,421) 462,993 219,572

Gross profit $ 794,851 $ (462,993) $ 331,858

Gross margin 144.1% 60.2%

The adjusted gross profit and adjusted gross margin is a non-GAAP financial measure that does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies. The gross profit has been adjusted from IFRS by removing the non-cash change in biological assets of $997,711 and removing $213,690 from cost of goods sold, which represents the non-cash fair value less costs to sell markup on dried marijuana inventory sold during the year. In addition, pre-distribution growing costs have been removed, which relate to costs incurred prior to the Company receiving its full license from Health Canada. The resulting adjusted gross profit is $331,858 and combined adjusted gross margin of 60.2% from retail and wholesale shipments for the year. Management believes this

RESULTS OF OPERATIONS

Revenue and Cost of Sales


13 months ended May 31, 2014

Revenue $ 551,430 $ -

Cost of sales:

Cost of goods sold 433,262 -

Pre-distribution growing costs 321,028 463,343

Change in biological assets (997,711) -

(243,421) 463,343

Gross profit $ 794,851 $ (463,343)

Revenue for the year ended May 31, 2015 was $551,430 versus $nil in 2014. The Company obtained its license to sell medical marijuana in late November 2014, with the Company completing its first commercial shipment in December 2014. No revenue was earned prior to December 2014.

Cost of sales currently consist of three main categories: (i) cost of goods sold, (ii) pre-distribution growing costs, and (iii) change in biological assets.

(i) Cost of goods sold include the direct cost of materials and labour related to the medical marijuana sold. This would include growing, cultivation and harvesting costs, stringent quality assurance and quality control, as well as packaging and labelling. In the year ended May 31, 2015, the Company recognized $433,262 of cost of goods sold (2014 - $nil). Cost of goods sold were not recognized prior to this, as the Company had not yet commenced sales. All medical marijuana shipped and sold by Aphria has been grown and produced by the Company.

(ii) Pre-distribution growing costs include costs directly attributable to the growing and cultivation of medical marijuana that were expensed prior to the Company receiving its full license to produce and sell medical marijuana under the MMPR. No costs were classified as pre-distribution growing costs after receiving its full license. The Company incurred $321,028 pre-distribution growing costs in the year ended May 31, 2015 (2014 - $463,343).


Introduction of Permanent

Compassionate Pricing

FEB 2015


Selling, Marketing and Promotion Costs

For the year ended May 31, 2015, the Company incurred selling, marketing and promotion costs of $720,217, versus $105,000 in the comparable prior period. This increase in the fiscal 2015 periods is related to the commencement of the Company’s call centre operations, which were outsourced to a third party, shipping costs, as well as the development of promotional and information materials. The Company is currently bringing the majority of call centre operations in-house to reduce costs going forward.

Share-based Compensation

The Company recognized share-based compensation expense of $1,261,589 for the year ended May 31, 2015 compared to $nil for the prior year. The share-based compensation expense recognized is related to the 4,520,000 stock options granted throughout fiscal 2015 to various directors, officers, employees and consultants of the Company. Share-based compensation was valued using the Black-Scholes valuation model and represents a non-cash expense.

Listing Cost

Aphria’s qualifying transaction to list on the TSX-V between Black Sparrow and PNW has been accounted for as a reverse acquisition that does not constitute a business combination. For accounting purposes, the legal subsidiary, PNW, has been treated as the acquirer and Black Sparrow, the legal parent, has been treated as the acquiree. The Company recognized a listing cost for the year ended May 31, 2015 of $3,278,068, respectively.

Listing cost Year ended May 31, 2015

Excess attributed to cost of listing $ 2,468,020

Legal 570,034

Professional, consulting and other fees 240,014

$ 3,278,068

Of the total listing cost expense, $2,468,020 is non-cash. The listing cost is not expected to recur in the future. For accounting purposes, these financial statements reflect a continuation of the financial position, operating results and cash flows of the Company’s legal subsidiary, PNW.

Net Loss

The net loss for the year ended May 31, 2015 of $6,543,444, or $0.14 per share increased compared to the previous year of $1,566,637, or $0.07 per share. The net loss for the fourth quarter ended May 31, 2015 showed an improvement at $481,380, or $0.01 per share versus $783,415, or $0.03 per share for the fourth quarter in 2014.

measure provides useful information as it represents the gross profit and gross margin based on the Company’s cost to produce inventory sold and removes fair value metrics required by IFRS.

The following is the Company’s adjusted gross profit and adjusted gross margin as compared to IFRS for the quarter:

Three months ended May 31, 2015

Three months ended May 31, 2015

IFRS Adjustments Adjusted

Revenue $ 499,890 $ - 499,890

Cost of sales:

Cost of goods sold 406,404 (202,975) 203,429

Pre-distribution growing costs - - -

Change in biological assets (492,222) 492,222 -

(85,818) 289,247 203,429

Gross profit $ 585,708 $ (289,247) $ 296,461

Gross margin 117.2% 59.3%

The adjusted gross profit increased in the fourth quarter to $296,461 from $35,396 in the third quarter of 2015. However, the adjusted gross margin decreased from 68.7% to 59.3%. This is due to approximately half of fourth quarter’s sales coming from wholesale shipments, which have a lower gross margin than retail sales.

General and Administrative Costs



Executive compensation $ 679,692 $ 673,750

Consulting fees 390,893 145,000

Office and general 380,063 15,130

Professional fees 259,488 48,031

Salaries and wages 162,235 -

Travel and accomodation 147,136 1,574

Rent 62,910 102,500

$ 2,082,417 $ 985,985

General and administrative costs were $2,082,417 in the year ended May 31, 2015, compared to $985,985 for the thirteen months ended May 31, 2014. The Company transitioned from application stage to a fully licensed producer as well as becoming a publicly traded company during fiscal 2015, resulting in additional costs compared to the prior year. During the year ended May 31, 2015, the Company incurred $250,000 of consulting fees that relate to the departure of a minority shareholder that are not expected to be recurring in nature.


19

Strain of the Month

Strain of the Month

MAR 2015


COMMITMENTS

The Company has a lease commitment until December 31, 2018 for the rental of greenhouse and office space from a related party. The Company has an option to extend this lease for two additional 5 year periods. Minimum payments payable over the next five years are as follows:

Fiscal year ending May 31,

2016 $ 138,647

2017 138,647

2018 138,647

2019 80,877

Total $ 496,818

The Company has a commitment to fund additional sponsorships of patient studies over the next 2 years of up to $360,000, based on minimum patient enrollments in the study.

RELATED PARTY BALANCES AND TRANSACTIONS

Prior to going public, the Company funded operations through the support of related parties. Since going public, the Company has continued to leverage the purchasing power of these related parties for certain of its growing related expenditures. The Company owes $nil to related parties as at May 31, 2015 (2014 - $2,912,060). These parties are related as they are corporations that are controlled by certain officers and directors of the Company (Mr. Cole Cacciavillani and Mr. John Cervini). These amounts are due on demand and non-interest bearing. During the year ended May 31, 2015, the Company repaid $2,487,011 to related parties, and converted another $1,000,000 that was due to related parties into share capital.

The Company transacts with related parties in the normal course of business. Through these related parties, Aphria is able to leverage the purchasing power for growing related commodities and labour, which provides the Company with better rates than if Aphria was sourcing these on its own. These transactions are measured at their exchange amounts.

During the year ended May 31, 2015, related party corporations charged or incurred expenditures on behalf of the Company totalling $574,951, inclusive of rent, (2014 - $2,120,120) which have been reimbursed.

The Company leased greenhouse and office space from a corporation over which an officer and director of the Company has control. Total rent of $105,935 was charged during the year ended May 31, 2015 (2014 - $102,500).

NON-GAAP FINANCIAL MEASURES

Aphria uses the following non-GAAP financial measures which it believes provides investors and analysts with additional information to better understand results as well as assess its potential. GAAP means generally accepted principles in Canada and represent International Financial Reporting Standards (“IFRS”).

ADJUSTED GROSS PROFIT AND ADJUSTED GROSS MARGIN

Adjusted gross profit and adjusted gross margin represents the gross profit and gross margin based on the Company’s cost to produce inventory sold after removing non-cash IFRS fair value metrics. Gross profit and gross margin is adjusted to exclude the non-cash change in biological assets, pre-distribution growing costs, as well as the non-cash fair value less costs to sell markup on dried marijuana inventory sold during the quarter. Adjusted gross profit and adjusted gross margin is not a measurement based on GAAP, does not have any standardized meaning prescribed by IFRS and may not be comparable to similar measures presented by other companies.

ADDITIONAL GAAP MEASURES

The Company uses a subtotal “Loss from operations”, which may be considered an additional GAAP measure as the subtotal heading is presented in the financial statements under IFRS that management believes is relevant to the understanding of the financial statements but is not a minimum line item mandated by IFRS.

Management believes this measure provides useful information to users by excluding items that are not related to core operations of the business. It is not intended to represent an alternative to net earnings or other measures of financial performance in accordance with IFRS.

LIQUIDITY AND CAPITAL RESOURCES

The Company constantly monitors and manages its cash flows to assess the liquidity necessary to fund operations. As at May 31, 2015, the Company had working capital of $9,390,844 and cash and cash equivalents of $7,051,909. Working capital provides funds for the Company to meet its operational and capital requirements. The Company does not have any long-term liabilities.

While the Company has incurred losses to date, based on the working capital available, management expects the Company to have adequate funds available on hand to meet the Company’s planned growth and expansion of facilities over the next 12 months.


First Wholesale Shipment of Dried Medical Marijuana

MAR 2015

21

Risk Factors

The Company’s overall performance and results of operations are subject to a number of risks and uncertainties. The Company is subject to certain risks and uncertainties from both financial and operational factors. Refer to the management information circular dated October 28, 2014 for additional risk factors related to the business. Some of the key risks are highlighted as follows:

Reliance on the License

Aphria’s ability to grow, store and sell medical marijuana in Canada will be dependent on maintaining its license with Health Canada. Failure to comply with the requirements of the license or any failure to maintain its license would have a material adverse impact on the business, financial condition and operating results of Aphria. Although Aphria believes it will meet the requirements of the MMPR for extension of the license, there can be no guarantee that Health Canada will extend or renew the license or, if it is extended or renewed, that it will be extended or renewed on the same or similar terms. Should Health Canada not extend or renew the license or should it renew the license on different terms, the business, financial condition and results of the operation of Aphria would be materially adversely affected.

Risks Inherent in an Agricultural Business

Aphria’s business involves the growing of medical marijuana, an agricultural product. Such business will be subject to the risks inherent in the agricultural business, such as insects, plant diseases and similar agricultural risks. Although Aphria expects that any such growing will be completed indoors under climate controlled conditions, there can be no assurance that natural elements will not have a material adverse effect on any such future production.

Legislative or Regulatory Reform

The commercial medical marijuana industry is a new industry and the Company anticipates that such regulations will be subject to change as the Federal Government monitors Licensed Producers in action. Aphria’s operations are subject to a variety of laws, regulations, guidelines and policies relating to the manufacture, import, export, management, packaging/labelling, advertising, sale, transportation, storage and disposal of medical marijuana but also including laws and regulations relating to drugs, controlled substances, health and safety, the conduct of operations and the protection of the environment. While to the knowledge of management, Aphria is currently in compliance with all such laws, any changes to such laws, regulations, guidelines and policies due to matters beyond the control of Aphria may cause adverse effects to its operations.

Oil Extraction Approved

JUL 2015


FINANCIAL INSTRUMENTS RISK EXPOSURE AND MANAGEMENT

The Company has classified its cash and cash equivalents as fair value through profit and loss (“FVTPL”), other receivables and promissory notes receivable as loans and receivables, and accounts payable and accrued liabilities and amounts due to related parties as other financial liabilities.

Refer to the financial statements for the year ended May 31, 2015 for additional information regarding the Company’s objectives and policies for financial instruments risk exposure and management.

ACCOUNTING STANDARDS

Changes in Accounting Standards

The Company assessed the effects of amendments to IAS 32 Offsetting Financial Assets and Liabilities and IAS 36 Impairment of Assets, which are effective retrospectively for annual periods beginning on or after January 1, 2014. The Company determined there was no significant impact from these adoptions.

Refer to the financial statements for the year ended May 31, 2015 for information on a number of new standards, amendments to standards and interpretations, which are not yet effective, and have not been applied in preparing these consolidated financial statements but may affect the Company.

Disclosure of Outstanding Share Data

As at the date of this report, the following securities were issued and outstanding:

Security Number outstanding

Common shares 52,479,587

Stock options 4,550,000

Warrants 16,673,127

Compensation warrants 1,420,601

Warrants on exercise of compensation warrants 802,268

Fully diluted 75,925,583

D I S C LO S U R E O F O U T S TA N D I N G S H A R E DATA R I S K FAC TO R S

Veteran Platform

JUN 2015


Reliance on a Single Facility

To date, Aphria’s activities and resources have been primarily focused on the premises leased in Leamington, Ontario. Aphria expects to continue the focus on this facility for the foreseeable future. Adverse changes or developments affecting the existing facility could have a material and adverse effect on Aphria’s ability to continue producing medical marijuana, its business, financial condition and prospects.

Expansion of Facilities

The expansion of facilities is subject to Health Canada regulatory approvals. While management does not anticipate significant issues receiving the necessary approvals, the delay or denial of such approvals would have a material adverse impact on the business and may result in Aphria not meeting anticipated or future demand when it arises.

Competition

The Company may face increased competition from other licensed producers as the industry matures. Increased competition from larger and/or better-financed competitors could have a material and adverse effect on the business and financial condition of Aphria. In addition, there may be pressure for industry consolidation creating larger companies with increased scope. To date, Health Canada has only issued a limited number of licenses under the MMPR. However, there are numerous pending applications for licenses. A significant increase in the number of licenses granted could have an impact on the operations of the Company. The Company intends to remain competitive through maintaining low cost production and investment in research and development, marketing, sales and client support.

Federal Court Case

On March 21, 2014 the Federal Court of Canada issued an order affecting the repeal of the Marihuana Medical Access Regulations (“MMAR”) and the application of certain portions of the MMPR which are inconsistent with the MMAR in response to a motion brought by four individuals. The risks to the business represented by this or similar actions are that they might lead to court rulings or legislative changes that allow those with existing licences to possess and/or grow medical marijuana and perhaps others to opt out of the regulated supply system implemented through the MMPR. This could significantly reduce the addressable market for Aphria’s products and could materially and adversely affect the business, financial condition and results of operations of Aphria.

Limited Operating History

Aphria, while incorporated in 1994, began carrying on business in 2012 and did not generate revenue from the sale of products until late 2014. The Company is therefore subject to many of the risks common to early-stage enterprises, including under-capitalization, cash shortages, limitations with respect to personnel, financial, and other resources and lack of revenues. There is no assurance that the Company will be successful in achieving a return on shareholders’ investment and the likelihood of success must be considered in light of the early stage of operations.

History of Losses

The Company has incurred losses in recent periods. Aphria may not be able to achieve or maintain profitability and may continue to incur significant losses in the future. In addition, Aphria expects to continue to increase operating expenses as it implements initiatives to continue to grow its business. If Aphria‘s revenues do not increase to offset these expected increases in costs and operating expenses, Aphria will not be profitable.

Product Liability

As a distributor of products designed to be ingested by humans, Aphria faces an inherent risk of exposure to product liability claims, regulatory action and litigation if its products are alleged to have caused significant loss or injury. In addition, the sale of Aphria’s products involves the risk of injury to consumers due to tampering by unauthorized third parties or product contamination. Previously unknown adverse reactions resulting from human consumption of Aphria’s products alone or in combination with other medications or substances could occur. Aphria may be subject to various product liability claims, including, among others, that Aphria’s products caused injury or illness, include inadequate instructions for use or include inadequate warnings concerning possible side effects or interactions with other substances. A product liability claim or regulatory action against Aphria could result in increased costs, could adversely affect Aphria’s reputation with its clients and consumers generally, and could have a material adverse effect on our results of operations and financial condition of Aphria. There can be no assurances that Aphria will be able to obtain or maintain product liability insurance on acceptable terms or with adequate coverage against potential liabilities. Such insurance is expensive and may not be available in the future on acceptable terms, or at all. The inability to obtain sufficient insurance coverage on reasonable terms or to otherwise protect against potential product liability claims could prevent or inhibit the commercialization of Aphria’s potential products.


25

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27• • • • • • • • • • • • • • • • • • • • • • Independent Auditors’ Report

PAGE

29 • • • • • • • • • • • • • • • • • • • • • • Consolidated Statements of Financial Position

PAGE

30• • • • • • • • • • • • • • • • • • • • • • Consolidated Statements of Loss and Comprehensive Loss

PAGE

31 • • • • • • • • • • • • • • • • • • • • • • Consolidated Statements of Changes in Equity (Deficiency)

PAGE

32• • • • • • • • • • • • • • • • • • • • • • Consolidated Statements of Cash Flows

PAGE

33 • • • • • • • • • • • • • • • • • • • • • •Notes to the Consolidated Financial Statements

CO N S O L I DAT E D F I N A N C I A L S TAT E M E N T SFOR THE T WELVE MONTHS ENDED MAY 31, 2015

AND THIR TEEN MONTHS ENDED MAY 31, 2014

(Expressed in Canadian Dollars, unless otherwise noted)

27

INDEPENDENT AUDITORS’ REPORT

To the Shareholders of Aphria Inc.

We have audited the accompanying consolidated financial statements of Aphria Inc., which comprise the consolidated statements of financial position as at May 31, 2015 and 2014, and the consolidated statements of loss and comprehensive loss, changes in equity (deficiency), and cash flows for the year mended May 31, 2015 and the thirteen month period ended May 31, 2014, and a summary of significant maccounting policies and other explanatory information.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Aphria Inc. as at May 31, 2015 and 2014, and its financial performance and its cash flows for the year ended May 31, 2015 and the thirteen month period ended May 31, 2014 in accordance with International Financial Reporting Standards.

“MNP LLP”

Chartered Professional Accountants Licensed Public Accountants

701 Evans Avenue, 8th floor, Toronto On, M9c 1A3 P: 416.626.6000 F: 416.626.8650

Toronto, Ontario September 8, 2015

29

CONSOLIDATED STATEMENTS OF FINANCIAL POSITIONAs at May 31,

Nature of operations (Note 1) Commitments (Note 12) Subsequent events (Note 15)

Approved on behalf of the Board

“John Cervini” “Cole Cacciavillani” Signed: Director Signed: Director

Note May 31, 2015

May 31, 2014

Assets

Current assets:

Cash and cash equivalents $ 7,051,909 $ 170,455

Other receivables 11 759,528 -

Inventory 5 1,724,247 -

Biological assets 6 288,858 -

Prepaid expenses 167,270 -

Current portion of promissory notes receivable 8 346,255 -

10,338,067 170,455

Property and equipment 7 3,626,161 1,568,796

Intangible assets 7 74,598 -

Promissory notes receivable 8 253,745 -

$ 14,292,571 $ 1,739,251

Liabilities and Shareholders' Equity

Current liabilities:

Accounts payable and accrued liabilities $ 947,223 $ 1,000,172

Due to related parties 9 - 2,912,060

947,223 3,912,232

Shareholders' equity (deficit):

Share capital 10 20,246,095 2,500

Warrants 10 556,589 -

Share-based payment reserve 10 1,261,589 -

Deficit (8,718,925) (2,175,481)

13,345,348 (2,172,981)

$ 14,292,571 $ 1,739,251

The accompanying notes are an integral part of these financial statements


Note

Number ofcommon

shares Share capital Warrants

Share-basedpayment

reserve Deficit Total

Balance at April 30, 2013 106,667 $ 10 $ - $ - $ (608,844) $ (608,834)

Shares issued 26,560,000 2,490 - - - 2,490

Net loss for the period - - - - (1,566,637) (1,566,637)

Balance at May 31, 2014 26,666,667 $2,500 $ - $ - $ (2,175,481) $ (2,172,981)

Shares issued, net of issuance costs 10 10,346,253 5,535,748 216,261 - - 5,752,009

Conversion of due to related parties 10 1,666,667 1,000,000 - - - 1,000,000

Subscription receipt shares, net of issuance costs

10 11,500,000 11,177,847 340,328 - - 11,518,175

Shares retained by Black Sparrow shareholders

4 2,300,000 2,530,000 - - - 2,530,000

Share-based payments - - - 1,261,589 - 1,261,589

Net loss for the year - - - - (6,543,444) (6,543,444)

Balance at May 31, 2015 52,479,587 $ 20,246,095 $ 556,589 $ 1,261,589 $ (8,718,925) $ 13,345,348

CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIENCY)

NoteYear ended

May 31, 2015

13 months ended May 31,

2014

Revenue $ 551,430 $ -

Cost of sales:

Cost of goods sold 5 433,262 -

Pre-distribution growing costs 321,028 463,343

Change in biological assets 6 (997,711) -

Gross profit 794,851 (463,343)

Expenses:

General and administrative 13 2,082,417 985,985

Share-based compensation 10 1,261,589 -

Selling, marketing and promotion 720,217 105,000

Amortization and depreciation 7 56,707 12,309

Research and development 69,528 -

Loss from operations (3,395,607) (1,566,637)

Listing costs 4 (3,278,068) -

Finance income 130,231 -

Net loss and comprehensive loss $ (6,543,444) $ (1,566,637)

Weighted average number of common shares 45,386,330 21,328,485

Loss per share - basic and diluted $ (0.14) $ (0.07)

The accompanying notes are an integral part of these financial statements


CONSOLIDATED STATEMENTS OF CASH FLOWS

Note Year ended May 31, 2015


Cash flows from operating activities:

Net loss for the period $ (6,543,444) $ (1,566,637)

Adjustments for

Amortization and depreciation 7 380,878 12,309

Share-based compensation 10 1,261,589 -

Change in biological assets 6 (997,711) -

Non-cash listing costs 4 2,468,020 -

Change in non-cash operating working capital

Other receivables (743,170) -

Inventory (726,536) -

Biological assets (288,858) -

Prepaid expenses (167,270) -

Accounts payable and accrued liabilities (86,515) 1,000,172

(5,443,017) (554,156)

Cash flows from financing activities:

Share capital issued, net of cash issuance costs 10 17,270,184 2,490

Increase in due to related parties 9 574,951 2,920,120

Repayment of due to related parties 9 (2,487,011) (631,864)

15,358,124 2,290,746

Cash flows from investing activities:

Investment in property and equipment 7 (2,404,846) (1,566,145)

Investment in intangible assets 7 (107,995) -

Investment in promissory notes receivable 8 (600,000) -

Net cash acquired in reverse takeover 4 79,188 -

(3,033,653) (1,566,145)

Increase in cash and cash equivalents during the period 6,881,454 170,445

Cash and cash equivalents, beginning of period 170,455 10

Cash and cash equivalents, end of period $ 7,051,909 $ 170,455

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTSFOR THE YEAR ENDED MAY 31, 2015 AND THIRTEEN MONTHS ENDED MAY 31, 2014

1. NATURE OF OPERATIONS

Aphria Inc. (the “Company” or “Aphria”) was incorporated under the Business Corporations Act (Alberta) on June 22, 2011 as Black Sparrow Capital Corp. (“Black Sparrow”) and was continued in Ontario on December 1, 2014. Pure Natures Wellness Inc. doing business as Aphria (“PNW”), a wholly-owned subsidiary of the Company, is licensed to produce and sell medical marijuana under the provisions of the Marihuana for Medical Purposes Regulations (“MMPR”). The registered office is located at 5300 Commerce Court West, 199 Bay Street, Toronto, Ontario.

The Company’s common shares are listed under the symbol “APH” on the TSX Venture Exchange (“TSX-V”).

On December 2, 2014, the Company closed its qualifying transaction with PNW. The Company was a capital pool company prior to the transaction. The transaction was accounted for as a reverse acquisition (refer to note 4).

These financial statements were approved by the Company’s board of directors on September 8, 2015.

2. BASIS OF PREPARATION

(a) Statement of compliance The Company’s financial statements have been prepared in accordance with International Financial Reporting

Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and Interpretations of the IFRS Interpretations Committee (“IFRIC”).

(b) Basis of measurement These financial statements have been prepared on the historical cost basis except for certain items that are

measured at fair value, as detailed in the Company’s accounting policies.

(c) Functional currency The Company and its subsidiary’s functional currency, as determined by management is Canadian dollars. These

financial statements are presented in Canadian dollars.

3. SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies used by the Company are as follows:

(a) Revenue Revenue is recognized at the fair value of consideration received or receivable. Revenue from the sale of goods is

recognized when all the following conditions have been satisfied, which are generally met once the products are shipped to customers.

• The Company has transferred the significant risks and rewards of ownership of the goods to the purchaser;

• The Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;

• The amount of revenue can be measured reliably;

• It is probable that the economic benefits associated with the transaction will flow to the entity; and

• The costs incurred or to be incurred in respect of the transaction can be measured reliably.



of recoverable amount and the carrying amount that would have been recorded had no impairment loss been previously recognized.

(h) Income taxes Income tax expense consisting of current and deferred tax expense is recognized in the statement of loss. Current

tax expense is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at period end, adjusted for amendments to tax payable with regards to previous years.

Deferred tax assets and liabilities and the related deferred income tax expense or recovery are recognized for deferred tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using the enacted or substantively enacted tax rates expected to apply when the asset is realized or the liability settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that substantive enactment occurs.

A deferred tax asset is recognized to the extent that it is probable that future taxable income will be available against which the asset can be utilized.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

(i) Earnings per share Basic earnings (loss) per share is calculated using the weighted average number of common shares outstanding

during the period. The dilutive effect on earnings per share is calculated presuming the exercise of outstanding options, warrants and similar instruments. It assumes that the proceeds of such exercise would be used to repurchase common shares at the average market price during the period. However, the calculation of diluted loss per share excludes the effects of various conversions and exercise of options and warrants that would be anti-dilutive.

The stock split in 2014 has been applied retrospectively as if it had occurred at the beginning of the periods presented.

(j) Share-based compensation The Company has a stock option plan in place. The Company measures equity settled share-based payments based

on their fair value at the grant date and recognizes compensation expense over the vesting period based on the Company’s estimate of equity instruments that will eventually vest. Fair value is measured using the Black-Scholes option pricing model. Expected forfeitures are estimated at the date of grant and subsequently adjusted if further information indicates actual forfeitures may vary from the original estimate. Any revisions are recognized in profit or loss such that the cumulative expense reflects the revised estimate.

(k) Research and development Research costs are expensed as incurred. Development expenditures are capitalized only if development costs can

be measured reliably, the product or process is technically and commercially feasible, future economic benefits are probable, and the Company intends to and has sufficient resources to complete development to use or sell the asset. Other development expenditures are recognized in profit and loss as incurred.

(b) Cash and cash equivalents Cash and cash equivalents are comprised of cash and highly liquid investments that are readily convertible into

known amounts of cash with original maturities of three months or less.

(c) Inventory Inventory is valued at the lower of cost and net realizable value. Cost is determined using the weighted average

method. Inventories of harvested cannabis are transferred from biological assets into inventory at their fair value at harvest less costs to complete and sell, which is deemed to be their cost. Any subsequent post-harvest costs are capitalized to inventory to the extent that cost is less than net realizable value. Net realizable value is determined as the estimated selling price in the ordinary course of business less estimated costs to sell. Packaging and supplies are initially valued at cost.

(d) Biological assets The Company’s biological assets consist of medical cannabis plants. These biological assets are measured at

fair value less costs to sell and costs to complete. At the point of harvest, the biological assets are transferred to inventory at fair value less costs to sell and costs to complete.

Gains or losses arising from changes in fair value less cost to sell are included in the results of operations of the related period.

(e) Property and equipment Property and equipment are stated at cost, net of accumulated depreciation and accumulated impairment losses, if any.

Depreciation is calculated using the following terms and methods:

Production equipment Straight-line 5-10 years Office equipment Straight-line 3-5 years Leasehold improvements Straight-line over lease term

An item of equipment is derecognized upon disposal or when no future economic benefits are expected from its use. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the statement of loss and comprehensive loss in the period the asset is derecognized.

The assets’ residual values, useful lives and methods of depreciation are reviewed at each financial year end, and adjusted prospectively if appropriate.

(f ) Intangible assets Intangible assets are comprised of an e-commerce platform and are recorded at cost less accumulated

amortization. Amortization is recorded on a straight-line basis over the estimated useful life of 2 years.

(g) Impairment of non-financial assets Long-term non-financial assets are tested for impairment when events or changes in circumstances indicate

that the carrying amount may exceed its recoverable amount. For the purpose of testing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating unit, or “CGU”). An impairment loss is recognized for the amount, if any, by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of the asset’s fair value less cost to sell and the value in use (being the present value of expected future cash flows of the asset or CGU). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the lesser of the revised estimate



(vii) Classification of financial instruments Cash and cash equivalents – FVTPL Other receivables – loans and receivables Promissory notes receivable – loans and receivables Accounts payable and accrued liabilities – other financial liabilities Due to related parties – other financial liabilities

(m) Critical accounting estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that

affect the application of policies and reported amounts of assets and liabilities, and revenue and expenses. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the review affects both current and future periods.

Biological assets and inventory Management is required to make a number of estimates in calculating the fair value of biological assets and

harvested cannabis inventory. These estimates include a number of assumptions such as estimating the stage of growth of the cannabis, harvesting costs, sales price, and expected yields.

Share-based compensation The fair value of share-based compensation expenses are estimated using the Black-Scholes option pricing model

and rely on a number of estimates, such as the expected life of the option, the volatility of the underlying share price, the risk free rate of return, and the estimated rate of forfeiture of options granted.

Estimated useful lives and amortization of property and equipment and intangible assets Amortization of property and equipment and intangible assets is dependent upon estimates of useful lives based

on management judgment.

(n) Adoption of new and revised accounting policies The Company assessed the effects of amendments to IAS 32 - Offsetting Financial Assets and Liabilities and IAS 36

- Impairment of Assets, which are effective retrospectively for annual periods beginning on or after January 1, 2014. The Company determined there was no significant impact from these adoptions.

(o) New standards and interpretations issued but not yet adopted A number of new standards, amendments to standards and interpretations are not yet effective for the year ended

May 31, 2015, and have not been applied in preparing these financial statements.

Amendments to IAS 16 - Property Plant and Equipment and IAS 41 - Agriculture - The amendments bring bearer plants, which are used solely to grow produce, into the scope of IAS 16 so that they are accounted for in the same way as property, plant and equipment. The amendments are effective for annual periods beginning on or after January 1, 2016, with earlier application being permitted.

IFRS 9 - Financial Instruments: Classification and Measurement, effective for annual periods beginning on or after January 1, 2018, with early adoption permitted, introduces new requirements for the classification and measurement of financial instruments.

(l) Financial instruments Financial assets are classified into one of four categories: • fair value through profit or loss (“FVTPL”); • held-to-maturity (“HTM”); • available for sale (“AFS”); and • loans and receivables.

(i) FVTPL financial assets Financial assets are classified as FVTPL when the financial asset is held for trading or it is designated as FVTPL.

Financial assets classified as FVTPL are stated at fair value with any resulting gain or loss recognized in profit or loss. Transaction costs are expensed as incurred.

(ii) HTM investments HTM investments are recognized on a trade-date basis and are initially measured at fair value, including transaction

costs and subsequently at amortized cost.

(iii) AFS financial assets AFS financial assets are those non-derivative financial assets that are designated as available for sale or are not

classified in any of the other categories. Gains and losses arising from changes in fair value are recognized in other comprehensive income.

(iv) Loans and receivables Loans and receivables are financial assets having fixed or determinable payments that are not quoted in an active

market. They are initially recognized at the transaction value and subsequently carried at amortized cost less, when material, a discount to reduce the loans and receivables to fair value.

(v) Impairment of financial assets Financial assets, other than those at FVTPL, are assessed for indicators of impairment at the end of each reporting

period. Financial assets are impaired when there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

The carrying amount of all financial assets, excluding trade receivables, is directly reduced by the impairment loss. The carrying amount of trade receivables is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognized in profit or loss. With the exception of AFS equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease relates to an event occurring after the impairment was recognized; the previously recognized impairment loss is reversed through profit or loss. On the date of impairment reversal, the carrying amount of the financial asset cannot exceed its amortized cost had impairment not been recognized.

(vi) Financial liabilities and other financial liabilities Financial liabilities are classified as either financial liabilities at FVTPL or other financial liabilities. Financial liabilities

at FVTPL are stated at fair value, with changes being recognized through profit or loss. Other financial liabilities are initially measured at fair value, net of transaction costs, and are subsequently measured at amortized cost using the effective interest method, with interest expense recognized on an effective yield basis.



5. INVENTORY

2015 2014

Harvested cannabis $ 1,655,259 $ -

Packaging and supplies 68,988 -

$ 1,724,247 $ -

The cost of inventories recognized as an expense in cost of sales was $405,466 during the year ended May 31, 2015 (2014 - $nil), with the remainder related to the sale of biological assets.

6. BIOLOGICAL ASSETS

Amount

Balance at April 30, 2013 and May 31, 2014 $ -

Increase in fair value less costs to sell due to

biological transformation 2,350,558

Transferred to inventory upon harvest (2,033,904)

Sale of biological assets (27,796)

Balance at May 31, 2015 $ 288,858

The increase in fair value less costs to sell over and above historical cost was $997,711 during the year (2014 - $nil). In determining the fair value of biological assets, management is required to make a number of estimates, including the expected cost required to grow the cannabis up to the point of harvest, harvesting costs, selling costs, sales price, and expected yields for the cannabis plant. These estimates are subject to volatility in market prices and a number of uncontrollable factors, which could significantly affect the fair value of biological assets in future periods.

IFRS 15 - Revenue from Contracts with Customers, effective for annual periods beginning on or after January 1, 2018, with early adoption permitted, specifies how and when to recognize revenue and enhances relevant disclosures to be applied to all contracts with customers.

The Company is assessing the impact of these new and revised standards.

4. REVERSE ACQUISITION

In December 2014, the Company completed its proposed transaction between Black Sparrow and PNW as previously disclosed in July 2014. PNW amalgamated with a new and direct wholly-owned subsidiary of Black Sparrow to become a direct, wholly-owned subsidiary of Black Sparrow. Black Sparrow changed its name to Aphria Inc. and remains as the resulting issuer. The transaction constituted the qualifying transaction of Black Sparrow under the policies of the TSX-V.

Immediately prior to the completion of the transaction, Black Sparrow consolidated its issued and outstanding common shares on the basis of one post-consolidation common share for each ten pre-consolidation common shares held. By way of a three-cornered amalgamation, Black Sparrow acquired all of the issued and outstanding shares of PNW by issuing one post-consolidation share for each PNW common share held. Each of the stock options and warrants to purchase common shares of PNW thereafter is exercisable for one post-consolidation common share of Aphria Inc.

This transaction has been accounted for as a reverse acquisition that does not constitute a business combination. For accounting purposes, the legal subsidiary, PNW, has been treated as the acquirer and Black Sparrow, the legal parent, has been treated as the acquiree.

Consideration transferred (2,300,000 shares at a price of $1.10 per share) $ 2,530,000

Net assets acquired:

Cash and cash equivalents $ 79,188

Other receivables 16,358

Accounts payable and accrued liabilities (33,566)

61,980

Excess attributed to cost of listing 2,468,020

$ 2,530,000

Listing cost:

Excess attributed to cost of listing $ 2,468,020

Legal 570,034

Professional, consulting and other fees 240,014

$ 3,278,068

For accounting purposes, these consolidated financial statements reflect a continuation of the financial position, operating results and cash flows of the Company’s legal subsidiary, PNW.



During the year ended May 31, 2015, the Company repaid $2,487,011 due to related parties, and converted another $1,000,000 that was due to related parties into share capital (2014 - received $800,000 of cash from related parties and repaid $631,864 due to related parties). The Company transacts with related parties in the normal course of business. These transactions are measured at their exchange amounts.

Key management compensation:

Year ended May 31, 13 months ended May 31,

2015 2014

Short-term $ 679,692 $ 673,750

Share-based compensation 908,142 -

Total $ 1,587,834 $ 673,750

During the year ended May 31, 2015, related party corporations charged or incurred expenditures on behalf of the Company (including rent) totalling $574,951 (2014 - $2,120,120, inclusive of a management and administrative fee of approximately 15%) which were reimbursed.

The Company leased greenhouse and office space from a corporation over which an officer and director of the Company has control. Total rent of $105,935 was charged during the year ended May 31, 2015 (2014 - $102,500).

10. SHARE CAPITAL

The Company is authorized to issue an unlimited number of common shares.

Common shares Number of shares Amount

Balance at April 30, 2013 106,667 $ 10

Shares issued (a) 26,560,000 2,490

Balance at May 31, 2014 26,666,667 2,500

Private placement, net of issuance costs (b) 10,346,253 5,535,748

Conversion of due to related parties (c) 1,666,667 1,000,000

Private placement, net of issuance costs (d) 11,500,000 11,177,847

Shares retained by Black Sparrow shareholders (e) 2,300,000 2,530,000

Balance at May 31, 2015 52,479,587 $ 20,246,095

During the 13 month period ended May 31, 2014, the Company ratified a share split of 106.666668 post-split shares for each pre-split share, bringing the total outstanding shares to 26,666,667.

(a) In July 2013, the Company issued 26,560,000 shares for gross proceeds of $2,490.

(b) In June 2014, the Company completed a private placement for 10,346,253 units for gross proceeds of $6,207,752. Each unit consists of a common share and one half of one common share purchase warrant. Each whole common share purchase warrant is exercisable for one common share at $1.20 per share for a period of 24 months expiring in June 2016. The full proceeds were allocated to share capital.

7. PROPERTY AND EQUIPMENT AND INTANGIBLE ASSETS

Production equipment

Office equipment

Leasehold improvements

Construction in process

Total Property and

equipment

Intangible assets

Cost

At April 30, 2013 $ 15,333 $ - $ - $ - $ 15,333 $ -

Additions 671,216 32,002 862,927 - 1,566,145 -

At May 31, 2014 686,549 32,002 862,927 - 1,581,478 -

Additions 539,818 191,642 1,368,685 304,701 2,404,846 107,995

At May 31, 2015 $ 1,226,367 $ 223,644 $ 2,231,612 $ 304,701 $ 3,986,324 $ 107,995

Accumulated depreciation

At April 30, 2013 $ 373 $ - $ - $ - $373 $ -

Expense for the period 8,352 1,241 2,716 - 12,309 -

At May 31, 2014 8,725 1,241 2,716 - 12,682 -

Expense for the period 139,584 23,310 184,587 - 347,481 33,397

At May 31, 2015 $ 148,309 $ 24,551 $ 187,303 $ - $ 360,163 $ 33,397

Net book value

At April 30, 2013 $ 14,960 $ - $ - $ - $ 14,960 $ -

At May 31, 2014 $ 677,824 $ 30,761 $ 860,211 $ - $ 1,568,796 $ -

At May 31, 2015 $ 1,078,058 $ 199,093 $ 2,044,309 $ 304,701 $ 3,626,161 $ 74,598

Amortization and depreciation is recorded within cost of sales and amortization and depreciation on the statement of loss and comprehensive loss.

8. PROMISSORY NOTES RECEIVABLE

The Company advanced a total of $600,000 to two organizations affiliated with the medical marijuana industry. One promissory note of $500,000 bears interest at 3% per annum, repayable in blended monthly instalments until May 2017. Another promissory note of $100,000 is non-interest bearing and is repayable in March 2016.

9. DUE TO/FROM RELATED PARTIES AND RELATED PARTY TRANSACTIONS

Prior to going public, the Company funded operations through the support of related parties. Since going public, the Company has continued to leverage the purchasing power of these related parties for certain of its growing related expenditures. The Company owed $nil to related parties as at May 31, 2015 (2014 - $2,912,060). These amounts were due upon demand and are non-interest bearing. These parties are related as they are corporations that are controlled by certain officers and directors of the Company.



In June 2014, the Company issued 2,600,000 stock options at an exercise price of $0.60 per share, exercisable for 5 years expiring in June 2019. The options vested upon the Company listing on a public stock exchange.

In August 2014, the Company issued 50,000 stock options at an exercise price of $1.10 per share, exercisable for 5 years expiring in August 2014. The options vested upon the Company listing on a public stock exchange.

In November 2014, the Company issued 480,000 stock options at an exercise price of $1.10 per share, exercisable for 3 years expiring in November 2017. 465,000 of the options vest 1/3 upon the Company listing on a public stock exchange, 1/3 on the first anniversary of listing, and 1/3 on the second anniversary of listing. The remaining 15,000 of the options granted vested upon the Company listing on a public stock exchange.

In December 2014, the Company issued 1,020,000 stock options at an exercise price of $1.10 per share, exercisable for 3 years expiring in December 2017. 100,000 of the options vested immediately. 320,000 of the options vest based on certain performance conditions after 15 months. 600,000 options vest based on certain performance conditions assessed every quarter over the life of the options.

In March 2015, the Company issued 205,000 stock options at an exercise price of $0.90 per share, exercisable for 3 years expiring in March 2018. 15,000 of the options vested immediately. 30,000 options vest 1/3 immediately, 1/3 on the first anniversary of grant, and 1/3 on the second anniversary. The remaining options vest based on certain performance conditions.

In April 2015, the Company issued 165,000 stock options at an exercise price of $1.18 per share, exercisable for 3 years expiring in April 2018. 15,000 options vest 1/3 immediately, 1/3 on the first anniversary of grant, and 1/3 on the second anniversary. The remaining options vest based on certain performance conditions.

The Company uses the Black Scholes option pricing model to determine the fair value of options granted using the following assumptions:

2015 2014

Volatility - estimate based on comparable companies 70% N/A

Risk-free interest rate 0.48% to 1.56% N/A

Expected life (years) 3 to 5 years N/A

Dividend yield Nil N/A

Forfeiture rate 0%-50% N/A

Exercise price $0.60 to $1.18 N/A

Share price $0.60 to $1.18 N/A

WARRANTS

In June 2014, as part of the private placement for 10,346,253 units, the Company issued 5,173,127 common share purchase warrants. Each whole common share purchase warrant is exercisable for one common share at $1.20 per share for a period of 24 months expiring in June 2016. The full proceeds were allocated to the common share and $nil to the warrant.

618,333 compensation warrants were also issued at a value of $216,261. Each compensation warrant is exercisable for one common share at an exercise price of $0.60 per share for a period of 5 years expiring in June 2019. The Company used the Black-Scholes option pricing model to determine the fair value of compensation warrants granted using the following assumptions: volatility of 70%, risk-free rate of 1.56%, expected life of 5 years, dividend yield of nil, and share price of $0.60.

Cash share issuance costs of $455,743 were paid and 618,333 compensation warrants were issued. Each compensation warrant is exercisable for one common share at an exercise price of $0.60 per share for a period of 5 years expiring in June 2019. The compensation warrants were valued at $216,261 and have been recorded in equity under Warrants.

(c) An additional $1,000,000 of amounts due to related parties was settled with shares of the Company, at a price of $0.60 per share, for a total of 1,666,667 shares issued.

(d) The Company completed a private placement raising aggregate gross proceeds of $12,650,000 through the sale of 11,500,000 subscription receipts (“Subscription Receipts”) at $1.10 per Subscription Receipt. Each Subscription Receipt was converted into one common share and one warrant of the Company. Each warrant is exercisable for one common share at a price of $1.50 for a period of 5 years expiring in December 2019.

The Agents were paid, along with the reasonable expenses, a cash commission equal to seven percent (7%) of the gross proceeds raised in the private placement, excluding the proceeds raised in connection with the sale of Subscription Receipts to certain purchasers introduced to the Agents by Aphria for a total of $964,001. In addition, the Agents received 802,268 compensation options (“Compensation Options”) entitling them to subscribe for Subscription Shares and Subscription Warrants. Each Compensation Option shall be exercisable at a price of $1.10 for a period of 24 months expiring in December 2016. The Compensation Options were valued at $340,328 and have been recorded in equity under Warrants. Additional costs of $167,824 were incurred for legal and other share issuance costs.

(e) As part of the reverse acquisition, 2,300,000 common shares were retained by Black Sparrow shareholders. These shares were valued at $1.10 for a total of $2,530,000.

STOCK OPTIONS

The Company adopted a stock option plan under which it is authorized to grant options to officers, directors, employees, and consultants enabling them to acquire common shares of the Company. The maximum number of common shares reserved for issuance of stock options that may be granted under the plan is 10% of the issued and outstanding common shares of the Company. The options granted can be exercised for a maximum of 10 years and vest as determined by the Board of Directors. The exercise price of each option may not be less than the market price of the common shares on the date of grant.

The option details of the Company are as follows:

Expiry date

Weighted Average

Exercise PriceNumber of

OptionsVested and exercisable

Balance at May 31, 2014 N/A - -

Granted - June 2, 2014 June 2, 2019 $0.60 2,600,000 2,600,000

Granted - August 18, 2014 August 18, 2019 $1.10 50,000 50,000

Granted - November 2014 November 2017 $1.10 480,000 170,000

Granted - December 2, 2014 December 2, 2017 $1.10 1,020,000 112,640

Granted - March 17, 2015 March 17, 2018 $0.90 205,000 25,000

Granted - April 7, 2015 April 7, 2018 $1.18 165,000 5,000

Balance at May 31, 2015 $0.81 4,520,000 2,962,640

The Company recognized a share-based compensation expense of $1,261,589 during the year ended May 31, 2015 (2014 - $nil). The total fair value of options granted during the year was $1,877,736 (2014 - $nil).



FAIR VALUE HIERARCHY

Financial instruments recorded at fair value are classified using a fair value hierarchy that reflects the significance of inputs used in making the measurements. Cash and cash equivalents are Level 1. The hierarchy is summarized as follows:

Level 1 – quoted prices (unadjusted) in active markets for identical assets and liabilities

Level 2 – inputs that are observable for the asset or liability, either directly (prices) or indirectly (derived from prices) from observable market data

Level 3 – inputs for assets and liabilities not based upon observable market data

FINANCIAL RISK MANAGEMENT

The Company has exposure to the following risks from its use of financial instruments:

• credit risk; and • liquidity risk.

(a) Credit risk The maximum credit exposure at May 31, 2015 is the carrying amount of cash and cash equivalents, other

receivables and notes receivable. The Company does not have significant credit risk with respect to customers. All cash and cash equivalents are placed with major Canadian financial institutions. The majority of other receivables relate to HST input tax credits.

(b) Liquidity risk As at May 31, 2015, the Company’s financial liabilities consist of accounts payable and accrued liabilities and

amounts due to related parties, which have contractual maturity dates within one year. The Company manages its liquidity risk by reviewing its capital requirements on an ongoing basis. Based on the Company’s working capital position at May 31, 2015, management regards liquidity risk to be low.

(c) Capital management The Company’s objectives when managing its capital are to safeguard its ability to continue as a going concern,

to meet its capital expenditures for its continued operations, and to maintain a flexible capital structure which optimizes the cost of capital within a framework of acceptable risk. The Company manages the capital structure and makes adjustments to it in light of changes in economic conditions and the risk characteristics of the underlying assets. To maintain or adjust its capital structure, the Company may issue new shares, issue new debt, or acquire or dispose of assets. As at May 31, 2015, the Company has not entered into any debt financing. The Company is not subject to externally imposed capital requirements.

Management reviews its capital management approach on an ongoing basis and believes that this approach, given the relative size of the Company, is reasonable. There have been no changes to the Company’s capital management approach in the period. The Company considers its cash and cash equivalents as capital.

In December 2014, as part of the subscription receipt private placement for 11,500,000 units, the Company issued 11,500,000 common share purchase warrants. Each whole common share purchase warrant is exercisable for one common share at $1.50 per share for a period of 5 years expiring in December 2019. The full proceeds were allocated to the common share and $nil to the warrant.

As part of this placement, 802,268 compensation options exercisable for one common share and one purchase warrant were issued to the agents. Each Compensation Option is exercisable at a price of $1.10 for a period of 24 months expiring in December 2016. Purchase warrants received upon exercise would be exercisable for one common share at $1.50 per share. The Compensation Options were valued at $340,328 using the Black-Scholes option pricing model. The fair value was determined using the following assumptions: volatility of 70%, risk-free rate of 1.01%, expected life of 2 years, dividend yield of nil, and share price of $1.10.

The warrant details of the Company are as follows:

Expiry dateNumber

of warrantsWeighted

average exercise price

June 3, 2016 5,173,127 $1.20

December 2, 2019 11,500,000 $1.50

Balance at May 31, 2015 16,673,127 $1.41

The compensation warrant/option details of the Company are as follows:

Expiry dateNumber of

broker optionsWeighted average

exercise price

June 3, 2019 618,333 $0.60

December 2, 2016 802,268 $1.10

Balance at May 31, 2015 1,420,601 $0.88

11. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS

FINANCIAL INSTRUMENTS

The Company has classified its cash and cash equivalents as FVTPL, other receivables and promissory notes receivable as loans and receivables, and accounts payable and accrued liabilities and amounts due to related parties as other financial liabilities.

The carrying values of other receivables, promissory notes receivable, accounts payable and accrued liabilities, and due to related parties approximate their fair values due to their short periods to maturity.



14. INCOME TAXES AND DEFERRED INCOME TAXES

A reconciliation of income taxes at the statutory rate with the reported taxes is as follows:

Year ended May 31,2015

13 months ended May 31,2014

Loss before income taxes $ 6,543,444 $ 1,566,637

Statutory rate 26.5% 26.5%

Expected income tax recovery at combined basic federal and provincial tax rate

(1,734,013) (415,159)

Effect on income taxes of:

Non-deductible share based compensation and other expenses

345,266 704

Non-deductible transaction expense 707,691 -

Non-capital loss carryforwards acquired on reverse takeover (39,980) -

Deductible share issuance costs (420,707) -

Tax assets not recognized 1,141,743 414,455

Income tax expense (recovery) $ - $ -

Deferred income tax assets and liabilities have not been recognized in respect of the following deductible temporary differences:

2015 2014

Non-capital loss carry forward $4,872,419 $2,160,143

Undepreciated capital cost in excess of net book value 393,558 12,682

Cumulative eligible capital 607,536 -

Deductible share issuance costs to be claimed 1,391,794 -

Biological assets and inventory in excess of tax cost (784,021) -

The Company has non-capital losses available for deduction against taxable income that expire as follows:

2031 $(611,288)

2032 (230,653)

2033 (1,384,987)

2034 (1,792,437)

2035 (853,054)

$(4,872,419)

15. SUBSEQUENT EVENTS

Subsequent to the period, the Company granted 30,000 stock options at an exercise price of $0.93 per share for a period of 3 years. The options vest 1/3 upon grant, 1/3 upon the first anniversary and 1/3 upon the second anniversary.

12. COMMITMENTS

The Company has a lease commitment until December 31, 2018 for the rental of greenhouse and office space from a related party. The Company has an option to extend this lease for two additional 5 year periods. Minimum payments payable over the next five years are as follows:

Fiscal year ending May 31,

2016 $ 138,647

2017 138,647

2018 138,647

2019 80,877

Total $ 496,818

The Company has a commitment to fund additional sponsorships of patient studies over the next 2 years of up to $360,000, based on minimum patient enrollments in the study.

13. GENERAL AND ADMINISTRATIVE EXPENSES



Executive compensation $ 679,692 $ 673,750

Consulting fees 390,893 145,000

Office and general 380,063 15,130

Professional fees 259,488 48,031

Salaries and wages 162,235 -

Travel and accomodation 147,136 1,574

Rent 62,910 102,500

$ 2,082,417 $ 985,985

Documents

2015 - aphria.ca · VII $499,890 $51,540 $950,740 Q3 2015 Q4 2015 Q1 2016 “ Beyond the foundation of regulatory standards, Aphria believes that processes and procedures need to