Aphria - Q2 2018 FS V5

Aphria Inc.

CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS FOR THE THREE MONTHS AND SIX MONTHS ENDED NOVEMBER 30, 2017 AND NOVEMBER 30, 2016

(Unaudited, expressed in Canadian Dollars, unless otherwise noted)

Aphria Inc. Condensed Interim Consolidated Statements of Financial Position (Unaudited ? In thousands of Canadian dollars)

Assets Current assets

Cash and cash equivalents Marketable securities Accounts receivable Other current assets Inventory Biological assets Due from related parties Land available for sale Current portion of convertible notes receivable

Capital assets Intangible assets Convertible notes receivable Embedded derivatives Interest in equity investee Long-term investments Deferred tax asset Goodwill

Liabilities Current liabilities

Accounts payable and accrued liabilities Income taxes payable Deferred gain on sale of intellectual property Current portion of promissory note payable Current portion of long-term debt

Long-term liabilities Promissory note payable Long-term debt

Shareholders' equity Share capital Warrants Share-based payment reserve Accumulated other comprehensive loss Retained earnings (deficit)

Nature of operations (Note 1) Commitments (Note 28) Subsequent events (Note 29)

Approved on behalf of the Board:

"John Cervini" Signed: Director

"Cole Cacciavillani" Signed: Director

November 30,

Note

May 31, 2017

2017

$ 116,087

4

55,855

2,666

5

8,783

6

8,706

7

1,398

8

--

9

3,160

11

2,578

199,233

9

134,251

10

1,579

11

8,996

11

5,251

12

27,493

13

60,088

14

1,511

1,200

$ 439,602

$ 79,910 87,347 826 5,571 3,887 1,363 464 --179,368 72,500 1,891 1,361 173 28,376 27,788 3,315 1,200

$ 315,972

$ 15,709

14

851

2,333

16

768

17

790

20,451

$ 5,874 --

2,800 878 765

10,317

16

--

366

17

31,022

31,420

51,473

42,103

18

363,479

274,317

19

445

445

7,633

3,230

(801)

--

17,373

(4,123)

388,129

273,869

$ 439,602

$ 315,972

The accompanying notes are an integral part of these condensed interim consolidated financial statements 2

Aphria Inc. Condensed Interim Consolidated Statements of Income and Comprehensive Income (Unaudited ? In thousands of Canadian dollars, except share and per share amounts)

Revenue Production costs

Gross profit before fair value adjustments

Note

For the three months ended November 30,

2017 $ 8,504

2016 $ 5,227

6

2,746

1,180

5,758

4,047

For the six months ended November 30,

2017 $ 14,624

2016 $ 9,602

4,092

2,234

10,532

7,368

Fair value adjustment on sale of inventory

6

Fair value adjustment on growth of biological assets

7

Gross profit

Operating expenses:

General and administrative

21

Share-based compensation

22

Selling, marketing and promotion

Amortization

Research and development

Non-operating items:

Consulting revenue

Foreign exchange gain

Gain (loss) on marketable securities

4

(Loss) gain on sale of capital assets

9

(Loss) gain on dilution of ownership in equity investee

12

Loss from equity investee

12

Deferred gain on sale of intellectual property recognized

Finance income, net

23

Unrealized gain on embedded derivatives

11

Gain on long-term investments

24

Income before income taxes

Income taxes

14

Net income

Other comprehensive loss Other comprehensive income (loss) from equity investee 12

Net comprehensive income

2,671 (3,115)

6,202

1,973 2,200 2,819

276 80

7,348

(1,146)

183 282

55 -(16) (441) 233 1,432

95 6,075 7,898

6,752

297 6,455

520 $ 6,975

1,233 (1,307)

4,121

3,807 (7,380)

14,105

1,225 251

1,819 251 89

3,635

486

-------196 -263 459

945

-945

3,708 4,709 4,767

515 170 13,869

236

476 131 (1,691)

(7) 7,535 (9,281)

467 1,912

628 25,157 25,327

25,563

4,067 21,496

-$ 945

(801) $ 20,695

2,572 (3,107)

7,903

2,184 455

3,200 452 338

6,629

1,274

----

11 ---292 -263 566

1,840

-1,840

-$ 1,840

Weighted average number of common shares - basic Weighted average number of common shares - diluted

Earnings per share - basic Earnings per share - diluted

138,839,530 145,878,443

25 $

0.05

25 $

0.04

95,624,114 138,775,253 101,606,150 146,075,449

$ 0.01 $

0.15

$ 0.01 $

0.15

84,644,788 90,626,824

$ 0.02 $ 0.02

The accompanying notes are an integral part of these condensed interim consolidated financial statements 3

Aphria Inc. Condensed Interim Consolidated Statements of Changes in Equity (Unaudited ? In thousands of Canadian dollars, except share amounts)

Balance at May 31, 2016 Share issuance - August 2016 bought deal Share issuance - November 2016 bought deal Share issuance - warrants exercised Share issuance - options exercised Share issuance - intangible asset acquisition Share-based payments Net comprehensive income for the period Balance at November 30, 2016

Number of common shares

Share capital (Note 18)

70,053,933 17,250,000 10,062,500 13,769,966

435,815 38,759 ---

111,610,973

$ 40,917 31,959 37,263 21,132 598 100 ---

$ 131,969

Warrants (Note 19)

$ 694 --(480) -359 ---

$ 573

Accumulated Share-based

other payment

comprehensive reserve

loss

$ 1,724

$ --

--

--

--

--

--

--

(233)

--

--

--

455

--

--

--

$ 1,946

$ --

Retained earnings (deficit)

$ (8,321) -------

1,840 $ (6,481)

Total

$ 35,014 31,959 37,263 20,652 365 459 455 1,840

$ 128,007

Number of common shares

Share capital (Note 18)

Balance at May 31, 2017

138,628,704

Share issuance - November 2017 bought deal

12,689,675

Share issuance - warrants exercised

417,855

Share issuance - options exercised

132,488

Share issuance - deferred share units

2,525

Income tax recovery on share issuance costs

--

Share-based payments

--

Shares held in escrow earned in exchange for services

--

Net comprehensive income for the period

--

Balance at November 30, 2017

151,871,247

$ 274,317 86,661 638 249 15 1,412 -187 --

$ 363,479

Warrants (Note 19)

$ 445 ---------

$ 445

Accumulated Share-based

other payment

comprehensive reserve

loss

$ 3,230

$ --

--

--

--

--

(92)

--

--

--

--

--

4,495

--

--

--

--

(801)

$ 7,633

$ (801)

Retained earnings (deficit)

$ (4,123) --------

21,496 $ 17,373

Total

$ 273,869 86,661 638 157 15 1,412 4,495 187 20,695

$ 388,129

The accompanying notes are an integral part of these condensed interim consolidated financial statements 4

Aphria Inc. Condensed Interim Consolidated Statements of Cash Flows (Unaudited ? In thousands of Canadian dollars)

Cash generated from (used in) operating activities: Net income for the period Adjustments for: Income taxes Fair value adjustment on sale of inventory Fair value adjustment on growth of biological assets Loss on marketable securities Unrealized foreign exchange gain on convertible notes receivable Amortization Loss (gain) on sale of capital assets Disposition and usage of bearer plants Accretion interest on convertible note receivable Unrealized gain on embedded derivatives Loss from equity investee Gain on dilution of ownership in equity investee Deferred gain on sale of intellectual property recognized Consulting revenue Amortization of finance fees on long-term debt Share-based compensation Gain on long-term investments Change in non-cash working capital

Cash provided by financing activities: Share capital issued, net of cash issuance costs Share capital issued on warrants exercised Share capital issued on share-based compensation exercised Advances from related parties Repayment of amounts due to related parties Proceeds from long-term debt Repayment of long-term debt

Cash used in investing activities: Repayment of promissory notes receivable Investment in capital assets Proceeds from disposal of capital asssets Investment in intangible assets, net of shares issued Convertible notes advances Investment in marketable securities Proceeds from disposal of marketable securities Investment in long-term investments Proceeds from disposal of long-term investments

Net increase in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period

Note

For the six months ended

November 30,

2017

2016

$ 21,496

$ 1,840

14 6 7 4 11 9,10 9 9 11 11 12 12 12 16

22 24 26

4,067 3,807 (7,380) 1,691

(77) 1,404

7 3 (585) (628) 9,281 (7,535) (467) (476) 2 4,709 (25,157) (3,747) 415

-2,572 (3,107)

--934 (11)

47 -------

2 455 (256) (318) 2,158

86,661

69,222

638

20,652

172

365

8

2,823

267

8

(2,327)

(267)

17

--

7,825

17

(375)

(277)

87,592

97,787

--

9

(59,014)

9

200

10

(9)

11

(14,001)

4

(5,000)

4

34,801

13

(10,897)

13

2,090

(51,830)

36,177

79,910

$ 116,087

440 (11,153)

33 (1,306)

---(6,418) 601 (17,803) 82,142 16,473 $ 98,615

The accompanying notes are an integral part of these condensed interim consolidated financial statements 5

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