ONTARIO SUPERIOR COURT OF JUSTICE ALLAN D SOUZA. - and -

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1 Court File No. CV CP BETWEEN: ONTARIO SUPERIOR COURT OF JUSTICE ALLAN D SOUZA - and - Plaintiff APHRIA INC., SOL GLOBAL INVESTMENTS CORP., VICTOR NEUFELD, COLE CACCIAVILLANI, JOHN CERVINI, CARL MERTON, and ANDY DEFRANCESCO Proceedings under the Class Proceedings Act, 1992 Defendants STATEMENT OF CLAIM pursuant to NOTICE OF ACTION ISSUED ON DECEMBER 12, 2018 January 11, 2019 MERCHANT LAW GROUP LLP 240 Richmond Street West Toronto, Ontario, M5V 1V6 Christopher Simoes (LSUC #69232D) Tel: Fax: Solicitors for the Plaintiff 1

2 TO: APHRIA INC. 245 Talbot Street West Unit 103 Leamington, ON, N8H 1N8 AND TO: SOL GLOBAL INVESTMENTS CORP. 100 King Street, Suite 5600 Toronto, ON, M5X 1C9 AND TO: VICTOR NEUFELD c/o APHRIA INC. 245 Talbot Street West Unit 103 Leamington, ON, N8H 1N8 AND TO: COLE CACCIAVILLANI c/o APHRIA INC. 245 Talbot Street West Unit 103 Leamington, ON, N8H 1N8 AND TO: JOHN CERVINI c/o APHRIA INC. 245 Talbot Street West Unit 103 Leamington, ON, N8H 1N8 AND TO: CARL MERTON c/o APHRIA INC. 245 Talbot Street West Unit 103 Leamington, ON, N8H 1N8 AND TO: ANDY DEFRANCESCO c/o SOL GLOBAL INVESTMENTS CORP. 100 King Street, Suite 5600 Toronto, ON, M5X 1C9 2

3 DEFININTIONS 1. Unless otherwise stated, all dollar amounts stated herein are in Canadian dollars. 2. In this Statement of Claim, in addition to the terms that are defined elsewhere herein, the following terms have the following meanings: (a) AIF means Annual Information Form; (b) Aphria means Aphria Inc.; (c) Aphria Annual Reports means all documents filed by Aphria on SEDAR at material times; (d) Aphria Individual Defendants means Victor Neufeld, Cole Cacciavillani, John Cervini, and Carl Merton; (e) CJA means the Ontario Courts of Justice Act, RSO 1990, c C-43, as amended; (f) Class and Class Members means all persons, wherever they may reside or be domiciled, who purchased or acquired TSX securities of Aphria Inc. during the Class Period, except for Excluded Persons; (g) Class Period means the period from, and including, January 10, 2018 to December 4, 2018; (h) Co-Conspirators means other corporations, persons, partnerships, firms and/or individuals not named in this pleading as defendants because their identities are currently unknown to the Plaintiff who participated as Co-Conspirators in the Conspiracy and Conspiracy Acts (as defined herein) and performed acts and made 3

4 statements and agreements in furtherance of the Conspiracy and Conspiracy Acts; (i) CPA means the Ontario Class Proceedings Act, 1992, SO 1992, c 6, as amended; (j) CSE means the Canadian Securities Exchange operated by CNSX Markets Inc.; (k) Defendants means all defendants named in this Statement of Claim; (l) Excluded Persons means the defendants, their past and present subsidiaries, affiliates, officers, directors, senior employees, legal representatives, heirs, predecessors, successors, and assigns, and any member of the families of the Individual Defendants; (m) Impugned Documents means the disclosure documents issued by Aphria during the Class Period; (n) Individual Defendants means Aphria Individual Defendants and SOL Individual Defendants; (o) LATAM Assets means the assets as defined in the share purchase agreement between Aphria Inc. and Scythian Biosciences Corp. dated July 17, 2018 and as represented by various public statements and disclosures by the Defendants; (p) MD&A means Management s Discussion and Analysis; (q) NI means National Instrument General Prospectus Requirements, as amended; (r) NI means National Instrument Continuous Disclosure Obligations, as amended; (s) NI means National Instrument Certification of Disclosure in Issuers Annual and Interim Filings, as amended; (t) Nuuvera Acquisition means the arrangement agreement between Aphria Inc. and 4

5 Nuuvera Inc. dated January 28, 2018 and as represented by various public statements and disclosures by the Defendants, and as represented by Aphria in its January 29, 2018 press release; (u) NYSE means the New York Stock Exchange; (v) OSA means the Securities Act, RSO 1990, c S.5, as amended; (w) Short Seller Report means the report from Hindenburg Research/Quintessential Capital Management entitled Aphria: A Shell Game with a Cannabis Business on the Side released on December 3, 2018, and related reports from Hindenburg Research/Quintessential Capital Management including the following: i. Could Rampant Red Flags Drown Aphria s Proposed Nuuvera Acquisition? released online on March 21, 2018; ii. Aphria Insiders Disclose Stake In Nuuvera s Initial Financing Round Just 1 Day Before Expected Deal Closing released online on March 22, 2018; iii. Aphria: Our Response released online on December 4, 2018; iv. Aphria Part 2: We Believe This Rot Runs Deep released online on December 6, 2018; and v. The Latest Act in The Aphria Circus: A Very Obviously Related-Party Hostile Takeover Offer released online on December 6, (x) SOL means SOL Global Investments Corp. and as it was previously known, Scythian Biosciences Corp.; (y) SOL CSE Filings means all filings made by SOL with the CSE at material times; (z) SOL Individual Defendants means DeFrancesco and Neufeld; (aa) Securities Legislation means Securities Act, RSO 1990, cs.5, 5

6 Securities Act, RSA 2000, c S-4, Securities Act, RSBC 1996, c 418, Securities Act, CCSM c S50, Securities Act, SNB 2004, c S-5.5, Securities Act, RSNL 1990, c S-13, Securities Act, SNWT2008, c 10, Securities Act, RSNS 1989, c 418, Securities Act, S Nu 2008, c 12, Securities Act, RSPEI 1988, c S-3.1, Securities Act, RSQ c V-1.1, Securities Act, 1988, SS , c S-42.2, and Securities Act, SY 2007, c 16, all as amended; (bb) SEDAR means the system for electronic document analysis and retrieval of the Canadian securities administrators; (cc) TSX means the Toronto Stock Exchange; RELIEF SOUGHT 3. The Plaintiff claims: (a) an order certifying this action as a class proceeding and appointing the Plaintiff as the representative plaintiff for the Class or such other class as may be certified by the Court; (b) leave to amend this pleading on a nunc pro tunc basis (if necessary) as of the date of the issuance of the Notice of Action, to pursue the causes of action set out in Part XXIII.1 of the OSA and, if necessary, the equivalent sections of the other Canadian Securities Legislation; (c) a declaration that throughout the Class Period, the Defendants, or some of them, made a misrepresentation; (d) a declaration that the Defendants, or some of them, made the misrepresentation negligently; 6

7 (e) a declaration that Aphria is vicariously liable for the acts and/or omissions of the defendants Neufeld, Cacciavillani, Cervini, and Merton; (f) a declaration that SOL is vicariously liable for the acts and/or omissions of the defendants DeFrancesco and Neufeld; (g) an order directing a reference or giving such other directions as may be necessary to determine issues not determined at the trial of the common issues; (h) general and special damages in the sum of $200,000,000 or such other amount as this Honourable Court deems appropriate; (i) damages for: i. conspiracy; ii. unjust enrichment; iii. waiver of tort; and iv. aggravated, exemplary, and punitive damages; (j) prejudgment and post judgment interest; (k) costs of this action on a substantial indemnity basis or in an amount that provides full indemnity plus, pursuant to section 26(9) of the CPA, the costs of notice and of administering the plan of distribution of the recovery in this action plus applicable taxes; and (l) such further and other relief as to this Honourable Court may seem just. 7

8 OVERVIEW 4. Aphria, as it states in various Aphria Annual Reports: (a) is a company amalgamated under the laws of the province of Ontario; (b) is licensed to produce and sell medical cannabis under Canadian laws; (c) received a license to produce and sell medical cannabis on November 26, 2014 and a license to sell cannabis extracts on August 18, 2016; and (d) has its operations based in Leamington, Ontario; 5. SOL, as it states in various CSE Filings: (a) is an international cannabis company with a focus on opportunities in legal U.S. states; and (b) has strategic investments and partnerships across cultivation, distribution and retail that complement the company s R&D program with the University of Miami. 6. The defendant, DeFrancesco: (a) set up and acquired the LATAM Assets; (b) played a material role in Aphria s acquisition of the Nuuvera Acquisition; (c) is a founding investor in Aphria; (d) played a material role in the reverse-mergers that took both Aphria and SOL public; (e) served as an advisor to Aphria in various bought deal financings; and (f) served as the chairman and chief investment officer of SOL. 8

9 7. The defendants Neufeld, Cervini, Cacciavillani, and Merton are insiders per the OSA, and all, or some of them, delayed, or did not fully disclose their direct, or indirect interests: (a) in the Nuuvera Acquisition prior to its acquisition by Aphria; and/or (b) in the LATAM Assets prior to its acquisition by Aphria. 8. On December 3, 2018, a report from Hindenburg Research entitled Aphria: A Shell Game with a Cannabis Business on the Side, (one of the reports comprising the Short Seller Report ), indicated that contrary to the Representations (as detailed herein) of the Defendants, Aphria had purchased the LATAM Assets from SOL at prices that were vastly inflated, or for wholly fabricated values which calls into question the validity and truthfulness of the Impugned Documents (as detailed herein). 9. The Short Seller Report also discloses other acquisitions made by Aphria involving the individual Defendant DeFrancesco, where Aphria acquired assets at vastly inflated or possibly fabricated prices, including the Nuuvera Acquisition, and without timely and appropriate disclosure of insider interests. 10. On December 6, 2018, Aphria announced it was appointing a special committee of directors to review the acquisition of the LATAM Assets. 11. Following the release of the Short Seller Report on December 3, 2018, the share price of Aphria as listed on the TSX dropped precipitously. 9

10 12. As a result of the Defendants wrongful acts or omissions asserted herein and the corresponding decline in the market value of Aphria s securities, the Plaintiff and other Class Members have suffered significant losses and damages. THE PARTIES The Plaintiff 13. The Plaintiff, Allan D Souza, is a resident of Mississauga, Ontario, and purchased Aphria securities through the Toronto Stock Exchange during the Class Period. Mr. D Souza purchased 300 shares of Aphria on September 10, 2018 and remained an Aphria shareholder, as of the end of the Class Period. As a result of the actions or omissions of the Defendants during the Class Period, Mr. D Souza has incurred losses in the value of his Aphria shares. The Defendants 14. The Defendant, Aphria Inc. ( Aphria ), purports to produce and sell medical cannabis in Canada and internationally. Aphria is a body corporate, maintaining offices, operations, and employees in Ontario with a registered office located at 199 Bay Street, 5300 Commerce Court West, Toronto, Ontario, M5L 1B Aphria common shares are listed on the Toronto Stock Exchange ( TSX ) under the 10

11 symbol APHA and on the New York Stock Exchange ( NYSE ) under the symbol APHA. 16. The Defendant, SOL Global Investments Corp. ( SOL ), purports to be an international cannabis company. SOL is a body corporate, maintaining offices, operations, and employees in Ontario with a registered office located at 100 King Street West, Suite 5600, Toronto, Ontario, M5X 1C SOL was formerly known as Scythian Biosciences Corp. On October 25, 2018, Scythian Biosciences Corp. announced the company had changed its name to SOL Global Investments Corp. 18. SOL common shares are listed on the Canadian Securities Exchange ( CSE ) under the symbol SOL, and in the United States on the OTCQB under the symbol SOLCF. 19. The Defendant, Victor Neufeld ( Neufeld ), is and was during the Class Period, Aphria s Chairman of the Board, Chief Executive Officer ( CEO ), and Director. 20. At material times, Neufeld was a director of SOL. 21. The Defendant, Cole Cacciavillani ( Cacciavillani ), is and was during the Class Period, Aphria s co-founder and Vice President of Growing Operations, and Director. 11

12 22. The Defendant, John Cervini ( Cervini ), is and was during the Class Period, Apria s cofounder and Vice President of Infrastructure and Technology, and Director. 23. The Defendant, Carl Merton ( Merton ), is and was during the Class Period, Aphria s Chief Financial Officer ( CFO ). 24. The Defendant, Andy DeFrancesco ( DeFrancesco ), is and/or was during the Class Period, involved as a Director and in various capacities for numerous companies whose assets were ultimately acquired by Aphria, including SOL s Officer, Director and Chairman of the Board of Directors. 25. Defendants Aphria and SOL, and the individual Defendants are referred to herein, collectively, as the Defendants. 26. Other corporations, persons, partnerships, firms and/or individuals not named in this pleading as defendants because their identities are currently unknown to the Plaintiff, participated as Co-Conspirators in the Conspiracy and Conspiracy Acts (as defined below) and performed acts and made statements and agreements in furtherance of the Conspiracy and Conspiracy Acts (the Co-Conspirators ). APHRIA S DISCLOSURE OBLIGATIONS 27. By its own election, Aphria was a reporting issuer throughout the Class Period. Aphria 12

13 elected to become a reporting issuer in order to render its securities publicly tradable, which provided it with a broader ability to raise capital. 28. Aphria assumed specific obligations relating to its disclosures. 29. In order to maintain its status as a reporting issuer, Aphria was required throughout the Class Period to: (a) release and file with SEDAR quarterly interim financial statements and audited annual financial statements prepared in accordance with applicable accounting principles; and, contemporaneously with each of the foregoing, MD&A 1 and, annually, AIF 2 ; and (b) provide full, true and plain disclosure in any prospectus of all material facts relating to the securities issued or proposed to be distributed. 30. The plaintiff pleads and relies on: (a) ss 77 and 78 of the OSA; Parts 4, 5 and 6 of National Instrument ; item 1.4(g) of Form F1 Management s Discussion & Analysis (which required Aphria to disclose in each annual and interim MD&A any commitments, events, risks or uncertainties that it reasonably believed would materially affect Aphria s 1 MD&As are a narrative explanation of how the company performed during the period covered by the financial statements, and of the company s financial condition and future prospects. The MD&A must discuss important trends and risks that have affected the financial statements, and trends and risks that are reasonably likely to affect them in future. 2 AIFs are an annual disclosure document intended to provide material information about the company and its business at a point in time in the context of its historical and future development. AIF describes the company, its operations and prospects, risks and other external factors that impact the company specifically. 13

14 future performance); (b) item 5.2 of Form F2 Annual Information Form (which required Aphria to disclose environmental risks and any other matter that would be most likely to influence an investor s decision to purchase Aphria securities); (c) the rules and policies of National Policy No disclosure standards; and (d) section 56 of the OSA and the analogous provisions of other Canadian Securities Legislation, informed by NI Aphria and Aphria Individual Defendants controlled the contents of Aphria s MD&As, financial statements, AIFs and the other documents particularized herein. The misrepresentations made therein were made by Aphria and Aphria Individual Defendants. SOL S DISCLOSURE OBLIGATIONS 32. By its own election, SOL was a reporting issuer in Ontario throughout the Class Period. SOL elected to become a reporting issuer in order to render its securities publicly tradable, which provided it with a broader ability to raise capital. 33. SOL assumed specific obligations relating to its disclosures including requirements to abide by the following CSE policies: (a) POLICY 5 - TIMELY DISCLOSURE, TRADING HALTS AND POSTING REQUIREMENTS; i. The policy is not an exhaustive statement of the timely and continuous 14

15 disclosure requirements applicable to SOL and requires compliance with National Policy Disclosure Standards; ii. Content of News Releases 1. Announcements of material information should be factual and balanced and unfavourable news must be disclosed just as promptly and completely as favourable news. News releases must contain sufficient detail to enable investors to assess the importance of the information to allow them to make informed investment decisions. Listed Issuers should communicate clearly and accurately the nature of the information, without including unnecessary details, exaggerated reports or editorial commentary. iii. Insider Trading 1. Listed Issuers should make insiders and others who have access to material information about the Issuer before it is generally disclosed aware that trading in securities of the Issuer (or securities whose market price or value varies materially with the securities of the Issuer) while in possession of undisclosed material information or tipping such information is prohibited under applicable securities legislation, and may give rise to administrative, civil and/or criminal liability. iv. Continuous Disclosure Obligations 1. a Listed Issuer shall disclose to the public as soon as reasonably practicable any information relating to the Issuer or any of its 15

16 subsidiaries that has come to the knowledge of the Issuer, if the information: a. is necessary to enable the public to appraise the financial position of the Issuer and its subsidiaries; b. is necessary to avoid the creation or continuation of a false market in the securities of the Issuer; or c. might reasonably be expected to materially affect market activity in or the price of the securities of the Issuer. 34. In order to maintain its status as a reporting issuer, SOL was required throughout the Class Period to: (a) release and file with the CSE quarterly interim financial statements and audited annual financial statements prepared in accordance with applicable accounting principles; and, contemporaneously with each of the foregoing, requisite material change reports; and (b) provide full, true and plain disclosure in any prospectus of all material facts relating to the securities issued or proposed to be distributed. 35. The plaintiff pleads and relies on: (a) the rules and policies of National Policy No disclosure standards; and (b) the analogous provisions of other Canadian Securities Legislation, informed by NI

17 36. SOL and SOL Individual Defendants controlled the contents of SOL CSE Filings, press releases and the other documents particularized herein and the misrepresentations made therein were made by SOL and SOL Individual Defendants. INDIVIDUAL DEFENDANTS ROLE IN DISCLOSURE Aphria Individual Defendants 37. Each of the Aphria Individual Defendants knew that Aphria was a reporting issuer and that in his role as a director and/or officer of Aphria, he would have direct responsibility for ensuring the accuracy of Aphria s disclosure documents. 38. The OSA, other Canadian Securities Legislation and certain National Instruments and companion policies promulgated thereunder, imposed specific obligations on the Individual Defendants in the preparation of Aphria s continuous disclosure documents. 39. The Plaintiff pleads and relies on: (a) the rules and policies of National Policy No disclosure standards; and (b) the analogous provisions of other Canadian Securities Legislation, informed by NI Each Aphria Individual Defendant was aware of and accepted these obligations, as applicable, in assuming his position as a director and/or officer of Aphria. 17

18 SOL Individual Defendants 41. Each of the SOL Individual Defendants knew that SOL was a reporting issuer and that in his role as a director and/or officer of SOL, he would have direct responsibility for ensuring the accuracy of SOL s disclosure documents. 42. The CSE, other Canadian Securities Legislation, and certain National Instruments, and companion policies promulgated thereunder, imposed specific obligations on the SOL Individual Defendants in the preparation of SOL s continuous disclosure documents. 43. The Plaintiff pleads and relies on: (a) the rules and policies of National Policy No disclosure standards; and (b) the analogous provisions of other Canadian Securities Legislation, informed by NI Each SOL Individual Defendant was aware of and accepted these obligations, as applicable, in assuming his position as a director and/or officer of SOL. BACKGROUND ON APHRIA S NUUVERA ASSETS ACQUISITION 45. In its MD&A filed and released January 10, 2018, and dated for the three months and six months ended November 30, 2017, Aphria stated the following: Additional investment in Nuuvera Corp. During the quarter, the Company entered into a subscription agreement with Nuuvera Corp. for the purchase of an additional 1,980,000 common shares, for a total cost of $4,

19 46. On January 29, 2018, Aphria filed and issued a press release in which statements included the following: Leamington and Toronto, Ontario January 29, 2018 Aphria Inc. ( Aphria or the Company ) (TSX: APH and US OTC: APHQF) and Nuuvera Inc. ( Nuuvera ) (TSXV:NUU), a leading, global cannabis company with a strong presence in Europe, Africa and the Middle East, are pleased to announce that they have entered into a definitive arrangement agreement (the Arrangement Agreement ) pursuant to which Aphria will acquire, by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) (the Transaction ) 100% of the issued and outstanding common shares (on a fullydiluted basis) of Nuuvera. The combined company will leverage Nuuvera s extensive international network and best-inclass manufacturing practices to become the preeminent global supplier of premium cannabis. The acquisition brings an already successful partnership between Aphria and Nuuvera under the Aphria brand, reducing costs and providing the potential to unlock greater economic value from future production. The Transaction has been unanimously approved by the Board of Directors of each of Aphria and Nuuvera and is supported by the management teams of both companies as well as significant shareholders of Nuuvera. The Transaction values Nuuvera at approximately $826 million. The combination of Aphria and Nuuvera creates a true global leader in medical cannabis with excellent potential for growth and value creation, said Vic Neufeld, Chief Executive Office of Aphria. This transaction, which builds on a longstanding relationship between the two companies, brings together our top tier ability to grow high-quality cannabis at a low-cost with Nuuvera s expansive international network, expertise in processing, and access to industry leading technology. I am thrilled to welcome Nuuvera to the Aphria family and I am confident they will play a significant role in our continued success. (the January 29, 2018 Press Release Representations ) BACKGROUND ON APHRIA S LATAM ASSETS AQUISITION 47. On July 17, 2018, Aphria filed and issued a press release in which statements included the following: 19

20 Leamington, Ontario July 17, 2018 Aphria Inc. ("Aphria" or the "Company") (TSX: APH and US OTC: APHQF) is proud to announce the Company's planned expansion into Latin America and the Caribbean with the proposed acquisition of industry-leading companies in Colombia, Argentina, Jamaica and a right of first offer and refusal in respect of Brazil through a definitive share purchase agreement (the "Agreement") with Scythian Biosciences Inc. ("Scythian"). Aphria will acquire 100% of the issued and outstanding common shares of LATAM Holdings Inc. ("LATAM Holdings"), a direct, whollyowned subsidiary of Scythian (collectively, the "Transaction"). Highlights of the Transaction include: Solidifies Aphria's leadership position in the global cannabis industry Provides Aphria with world class assets in the most advanced regulatory jurisdictions across LATAM and Caribbean markets, from which it can further grow and expand its international operations Strengthens Aphria's leading international management team with the addition of proven local LATAM and Caribbean executives Establishes Aphria's presence in the most advanced strategic market in South America, Colombia Gains first mover advantage in Argentina for eventual in country cultivation Acquires market leadership in Jamaica with the only producing Tier 3 cultivator license in the country Yields strategic rights to potentially expand into Brazil, the largest population in South America Delivers accretive cash flow beginning in calendar 2019 Colombia Strategic Launch Pad into South America Colcanna S.A.S. ("Colcanna" or the "Colombian Company"), will be the first company in the Coffee Zone of Colombia with cultivation and manufacturing licenses for the production of medicinal extracts of cannabis, a research license and a license for the production and extraction of cannabis, including cannabis oil, for domestic use and for export. It is in the advanced licensing stages for a THC license Unlike the former Guerilla territory where other global cannabis companies have focused their investments, the Coffee Zone has always been a land of peace, high productivity and progress. Colcanna sits on 34 acres of highly fertile, predominately flat land, which is essential for the optimal cultivation of cannabis. As a result, greenhouses will occupy more than 20 acres of the property and, with 20

21 6 harvests per year and two natural sources of water for irrigation, Colcanna is expected to achieve an initial annualized production of 30,000 kg, growing to 50,000 kgs but with access to the country's micro-scale growers, suitable for supplying the country and the region with high-quality medical cannabis Argentina First Mover Advantage ABP, S.A. ("ABP" or the "Argentinean Company") is an established and successful pharmaceutical import and distribution company that holds a series of licenses, including for the import of CBD oil, notably the first company in Argentina to have received this license. The Argentinean Company operates a pharmaceutical distribution warehouse and retail pharmacy and distributes to an extensive network of pharmacies, distributors, government clinics and hospitals throughout Argentina. ABP also holds agreements with the Top 20 health insurance companies, a strategic advantage in reaching patients accessing Argentina's free public healthcare system ABP is at the forefront of in-country medical cannabis research and clinical trials with two significant Medical Cannabis Cooperative Agreements. The Argentinean Company has partnered with Hospital Garrahan, a leading pediatric hospital in Buenos Aires, for a clinical study on the treatment of refractory epilepsy in children, and with Universidad Nacional De La Plata to support advances in medical cannabis research and education. Jamaica Only Producing Commercial Tier 3 License Marigold Projects Jamaica Limited ("Marigold" or the "Jamaican Company") has been granted several key licenses by the Jamaican Cannabis Licensing Authority, including: A Tier 3 license to cultivate more than five acres of land with cannabis for medical, scientific and therapeutic purposes. This license is the highest level of license available in Jamaica, and currently only one other company has been approved for a Tier 3 license; A conditional Tier 2 license to process cannabis for medical, scientific and therapeutic purposes, including the manufacturing of cannabis-based products, in a space of over 200 square meters; A conditional herb house retail license to sell cannabis products for medical, scientific and therapeutic purposes, with a space for immediate consumption by consumers, including tourists; A conditional therapeutic retail license to provide therapeutic or spa services utilizing cannabis products; and A conditional R&D license. 21

22 Lloyd Tomlinson will continue as Marigold's Managing Director and will be appointed Director, Jamaica Operations at Aphria International. Mr. Tomlinson, a Jamaican native, has more than 20 years' experience in the pharmaceutical industry and as the CEO of Blue Manhoe Estate he became the third-generation of his family to run the family's coffee business. In 2014, Mr. Tomlinson made history when he launched Timeless Herbal Care, Jamaica's first medical cannabis company. Brazil Strategic Option for Major Market The Company also remains focused on identifying the most attractive emerging opportunities through the region, including in Brazil where, as a result of the Transaction, the Company will receive a right of first offer and refusal (collectively the "Rights") in respect of a majority interest, upon the receipt of a license, in the entity receiving the license. With a population over 200 million and a comprehensive National Healthcare System, Brazil is poised to become an important market for medical cannabis, and Aphria's regional and corporate leadership remain connected to the rapidly evolving opportunity in Brazil. Impactful Leadership for LATAM and the Caribbean Scythian's highly experienced and well-regarded LATAM and Caribbean management team will join Aphria International as a critical component to this Transaction. Collectively, they have significantly advanced the opportunities at each of the companies acquired in this Transaction, while laying the groundwork for future growth in many countries throughout the region. They have built deep rosters of relationships throughout the region and, in particular, remain closely connected to governmental and regulatory agencies that are leading the rapid evolution of medical cannabis in LATAM. The team will be led by Gabriel Meneses, who will be appointed Vice President, LATAM and Caribbean at Aphria International. Mr. Meneses will bring more than 14 years of extensive international leadership experience to Aphria International, where he will oversee the development of new market opportunities in Latin America while leading other initiatives that further stimulate the Company's growth in the regions' markets. He previously worked for Apple Inc., where he led the launch of Apple's first Commercial & Enterprise sales Organizations in Latin America and the Caribbean. Quotes from Leadership "Aphria is proud with this initiative to create a true leader in medical cannabis across LATAM and extend our leadership in the global industry," said Vic Neufeld, Chief Executive Officer at Aphria. "We have spent a considerable amount of time and resources evaluating opportunities in Latin America and the Caribbean and we are confident in the long-term strategic opportunity and the value it will bring to our shareholders. The Transaction, once completed, will firmly place Aphria at the center of the medical cannabis industry in the region, and will provide the strong foundation, relationships and infrastructure to capture 22

23 significant future growth as more LATAM and Caribbean markets evolve. We truly have the best international team in the business, and we are continuing to bring our industry-leading expertise, experience and know-how to strategic international markets." Transaction Details Aphria will acquire all of the issued and outstanding common shares (on a fullydiluted basis) of LATAM Holdings, a direct, wholly-owned subsidiary of Scythian with licenses and other rights and assets held through various subsidiaries in Argentina, Colombia and Jamaica, together with the Rights in Brazil, for aggregate transaction consideration of $193 million, plus by Aphria assuming $1 million in existing debt, with the remainder of the Transaction consideration in the form of common shares of Aphria at a deemed share price of $12.31, being the volume weighted average price of the Aphria shares as traded on the facilities of the TSX for the 20 trading days immediately prior to the date of the Agreement. Aphria expects to issue to Scythian 15,678,310 Aphria shares in connection with the Transaction, representing approximately 6.3% of the currently issued and outstanding shares of Aphria, calculated on a non-diluted basis. Aphria will acquire the following entities through LATAM Holdings: 90% of Colcanna, a Colombian medical cannabis producer, currently holding a CBD cultivation license from the Ministry of Justice and holding a license for processing, extraction, production and research for the local market and export for the international market of cannabis derivatives, from the Ministry of Health. Colcanna expects to receive its THC license from the Ministry of Justice within the next month; 100% of ABP, an Argentinean pharmaceutical import and distribution company, currently licensed for the importation of CBD oil for the purposes of research and development; 100% of Marigold Acquisitions Inc., a BC incorporated entity, which owns 100% of Hampstead Holdings Ltd., a Bermuda incorporated entity, which owns 49% of Marigold Projects Jamaica Limited, which has received a license to cultivate and conditional licenses to process, sell and provide therapeutic or spa services using cannabis products; and, The Rights to purchase 50.1% of a Brazilian incorporated entity, which Scythian is currently seeking to acquire, which is expected to hold a medical cannabis cultivation, processing and distribution license in Brazil, upon receipt of a license, for $24 million USD, and an additional right of first refusal to acquire an additional 20-39% of the same entity at fair market value at the time. The Transaction will proceed by way of a share purchase of LATAM Holdings by Aphria and is subject to a "majority of the minority" approval requirement by 23

24 Scythian shareholders (excluding Aphria and its affiliates), receipt of required regulatory and stock exchange approvals, and other customary conditions of closing. Aphria has secured irrevocable hard lock-ups (the "Lock-Ups") from approximately 40% of the shareholders of Scythian to vote in favour of the Transaction, and also holds an approximate 9% interest in Scythian, together with 672,195 outstanding warrants of Scythian, representing an additional 4% interest of Scythian calculated on a fully diluted basis. Collectively, the shares subject to these Lock-Ups represent, together with the Scythian shares already owned by Aphria, approximately 50% of the currently outstanding Scythian shares. Insiders of Aphria, including Mr. Neufeld, Mr. Cacciavillani, Mr. Cervini and Ms. Persofsky, currently hold an aggregate of 20,496 shares and 215,887 warrants of Scythian representing approximately 2.1% of Scythian on a fully diluted basis, which warrants have an exercise price of $5.50 per Scythian share and which currently exceeds the closing price of Scythian as of the date of the Agreement. Mr. Neufeld and Ms. Persofsky, current directors of Aphria, previously stepped down as directors from the Board of Directors of Scythian in the previous quarter. As part of leaving the Board of Directors of Scythian, Mr. Neufeld forfeited 160,000 options at an exercise price of $4.66, 140,000 options at an exercise price of $5.28 and 200,000 DSUs. In respect of the Transaction, certain members of the Board of Directors of Aphria (Mr. Neufeld, Mr. Cacciavillani, Mr. Cervini and Ms. Persofsky) holding shares or warrants in Scythian disclosed such interests to the Board of Directors of Aphria and all recused themselves from the meeting of directors during which the Transaction was discussed and from voting on the resolution approving the Transaction. Financial and Legal Advisors Stikeman Elliott LLP acted as legal counsel to Aphria. Cormark Securities Inc. is providing a fairness opinion and acted as financial advisor to the Board of Directors of Aphria (the July 17, 2018 Press Release Representations ) THE REPRESENTATIONS 48. All documents filed and released by Aphria on SEDAR, press releases and comments made by Aphria and Aphria Individual Defendants, and comments by Aphria Individual Defendants as representatives of Aphria during the Class Period are Aphria 24

25 Representations and include the Aphria Representations detailed below. 49. The January 29, 2018 Press Release Representations and the July 17, 2018 Press Release Representations were representations made by Aphria and Aphria Individual Defendants during the Class Period. 50. On February 7, 2018, Aphria filed a material change document containing the arrangement agreement between Aphria Inc. and Nuuvera Inc. dated January 28, 2018 (the Nuuvera Inc. Agreement ). 51. The July 17, 2018 Press Release Representations stated that Neufeld, Cacciavillani, and Cervini held shares and warrants of SOL. 52. On July 27, 2018, Aphria filed and released a share purchase agreement between Aphria and SOL (the SOL Share Purchase Agreement ). The SOL Share Purchase Agreement lists two of the Target Corporations as being MMJ Colombia Partners Inc., a corporation existing under the laws of Colombia and MMJ International Investments Inc., a corporation existing under the laws of the Province of British Columbia. 53. On July 27, 2018, Aphria filed and released a material change report in which statements included the following: had entered into a definitive share purchase agreement (the Agreement ) with Scythian Biosciences Corp. ( Scythian ) to acquire all of the issued and outstanding common shares (on a fully-diluted basis) of LATAM Holdings Inc. ( LATAM Holdings ), a direct, wholly-owned subsidiary of Scythian with 25

26 licenses and other rights and assets held through various subsidiaries in Argentina, Colombia and Jamaica (collectively, the Transaction ). The aggregate transaction consideration for the acquisition of LATAM Holdings, together with the Rights is C$193 million, payable in the form of common shares in the capital of Aphria (the Aphria Shares ) at a deemed share price of $12.31, being the volume weighted average price of the Aphria Shares as traded on the facilities of the Toronto Stock Exchange (the TSX ) for the 20 trading days immediately prior to the date of the Agreement. In addition to the share consideration, the Company will also assume US$1 million in existing debt. 54. On August 1, 2018, Aphria filed and released a press release in which statements included the following: Beyond that, we will continue to extend our industry-leading expertise and experience into global markets. We ve had an exciting year adding more depth and experience to our senior leadership team that has helped expand our international operations and presence outside of Canada, US and Australia to an additional eight countries, and look forward to continued expansion within LATAM, continued Neufeld. 55. On August 1, 2018, Aphria filed and released its consolidated financial statements for the year ended May 31, 2018 and May 31, 2017, MD&A, and Annual Information Form. 56. On August 1, 2018, Aphria filed FORM F1 Certification of Annual Filings Full Certificate for Neufeld and Merton wherein each certified that: (a) Review: I have reviewed the AIF, if any, annual financial statements and annual MD&A, including, for greater certainty, all documents and information that are incorporated by reference in the AIF (together, the "annual filings") of Aphria Inc. (the "issuer") for the financial year ended May 31, 2018; (b) No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the annual filings do not contain any untrue statement of a material fact 26

27 or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, for the period covered by the annual filings; (c) Fair presentation: Based on my knowledge, having exercised reasonable diligence, the annual financial statements together with the other financial information included in the annual filings fairly present in all material respects the financial condition, financial position and cash flows of the issuer, as of the date of and for the periods presented in the annual filings; and (d) Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer. 57. On August 27, 2018, Aphria filed and released its 2018 Annual Report in which statements included the following: Through the acquisition of Aphria International, and the conditional acquisition of LATAM Holdings Inc. subsequent to year-end, the Company secured access to key international markets, management team bench strength with a proven knowledge and high levels of executional success within the industries and jurisdictions in which they operate. The Company believes that with its significant experience in the highly regulated Canadian ACMPR market, it will be able to export its industry leading knowledge and practices to its global subsidiaries. LATAM Holdings Inc. Subsequent to year-end, the Company announced that it would acquire LATAM Holdings Inc. ("LATAM"). The acquisition of LATAM provides the Company with immediate access to the high profile, attractive countries in South America and the Caribbean, including Colombia, Argentina, Jamaica and potentially Brazil. 27

28 Colombia The acquisition of LATAM, provides the Company with 90% ownership of Colcanna. This ownership provides the Company with the ability to further develop the global Aphria brand with Aphria branded products distributed to patients in Columbia. Upon Colcanna developing its 34 acres of land for the cultivation of cannabis, which is expected to provide 50,000 kgs annually, the Company will maintain the control of the cultivation and distribution of cannabis in Columbia. Until the emerging Colombian market demand grows to match the Company's Colombian production, the Company will be able to utilize its export licence to distribute the excess production globally. Argentina The acquisition of LATAM, provides the Company with sole ownership of APB, providing the Company with a significant first-mover advantage, as APB is the first company with an in-country medical cannabis research licence. The Company also continues to work with Hospital Garrahan, a leading pediatric hospital in Buenos Aires. The Company believes that, once the Argentinian government approves medical cannabis, in-country cultivation opportunities will be attractive. Jamaica The acquisition of LATAM provides the Company with a 49% ownership interest in Marigold Projects Jamaica Limited ("Marigold"), through multiple subsidiaries and a 95% royalty on profits through an Intellectual Property agreement. This acquisition will provide the Company with several key licences including a Tier 3 cultivation licence, a Tier 2 herb house licence, as well as licences for import, export and research purposes. Brazil Finally, the acquisition of LATAM provides the Company with an option to purchase 50.1% of a Brazilian entity for $24 million (USD), once it secures a medical cannabis licence from the Brazilian government and a right of first offer and refusal on another 20-39% of the Brazilian entity. This right of first refusal provides the Company with lower risk at a fixed price to enter into the Brazil market pending the Brazilian Company obtaining a licence. 58. On September 27, 2018, Aphria filed and released a press release in which statements included the following: Company cements foothold in the region with operations in Colombia, Argentina and Jamaica Leamington, Ontario September 27, 2018 Aphria Inc. ("Aphria" or the "Company") (TSX: APH and US OTC: APHQF) today announced that it has closed the acquisition of LATAM Holdings Inc. ("LATAM Holdings") from Scythian Biosciences (CSE:SCYB; Frankfurt: 95B; OTC Nasdaq Intl: SCCYF). The Transaction was funded by the assumption of US$1 million of existing LATAM Holdings debt with the remaining consideration funded by the 28

29 issuance of 15,678,310 common shares of Aphria. The closing was pursuant to the terms of the definitive share purchase agreement (the "Agreement") previously announced by the Company on July 17, As a result of the Transaction, the Company has solidified an important foothold in Latin America and the Caribbean by acquiring industry-leading cannabis-related companies in Colombia, Argentina and Jamaica as well as a right of first offer and refusal in respect of a majority interest in a Brazilian entity seeking a cannabis cultivation and sales license. "Aphria continues to execute on its plans for strategic international expansion, including in Latin America and the Caribbean," said Vic Neufeld, Chief Executive Officer of Aphria. "With a combined population of nearly 640 million, and with significant momentum from numerous countries introducing new or modernizing existing medical cannabis legislation, the region represents a significant opportunity for longterm growth. It also hosts some of the most favourable conditions for cultivating high-quality medical cannabis at substantial efficiencies ideal for both regional supply and export opportunities. This acquisition firmly cements Aphria's leadership in the region and on the global cannabis stage." As a result of the Agreement, the Company has acquired: A 90% ownership interest in Colcanna S.A.S. ("Colcanna"), the first company in the Coffee Zone of Colombia with cultivation and manufacturing licenses for the production of medicinal extracts of cannabis, a research license and a license for the production and extraction of cannabis, including cannabis oil, for domestic use and for export. It is in the advanced licensing stages for a THC license. ABP, S.A. ("ABP"), an established and successful pharmaceutical import and distribution company in Argentina which supported a number of University Hospitals to secure an import permit for cannabis oil. Aphria and ABP, in close partnership with the Argentinean government, will continue to advance opportunities for medical cannabis in the country, including the potential for in-country cultivation and pharmacy distribution of cannabis products. A 49% ownership interest in Marigold Projects Jamaica Limited ("Marigold"), which has received one of the only Tier 3 cultivation licenses in the country cultivate and conditional licenses to process, sell, provide therapeutic or spa services using cannabis products, and to operate herb houses to sell cannabis products for medical, scientific and therapeutic purposes, with a space for immediate consumption by consumers. A right of first offer and refusal in respect of a majority interest in a Brazilian entity, upon the receipt of a license, in the entity receiving the license. 29

30 59. On October 12, 2018, Aphria filed and released its MD&A in which statements included the following: Through the acquisition of Aphria International and the conditional acquisition of LATAM Holdings Inc., which closed subsequent to period-end, the Company secured access to key international markets, management team bench strength with a proven knowledge and high levels of executional success within the industries and jurisdictions in which they operate. The Company believes that with its significant experience in the highly regulated Canadian ACMPR market, it will be able to export its industry leading knowledge and practices to its global subsidiaries. Colombia The Company signed an exclusive supply agreement with Colcanna S.A.S. ( Colcanna ), a Colombia-based pharmaceutical import and distribution company, which is licensed to import, sell and distribute medical cannabis, medical products and derivatives in Colombia. Under the terms of the agreement, Aphria will be the exclusive supplier of cannabis products to Colcanna for the Colombian market. Argentina In March 2018, the Company signed an exclusive supply agreement with ABP, S.A. ( ABP ), an Argentina-based pharmaceutical import and distribution company, which is licensed to import CBD oil into Argentina for a clinical drug trial studying epilepsy in children. Under the terms of the agreement, Aphria is the exclusive supplier of cannabis oil to ABP for the Argentinian market and ABP will purchase medical cannabis products from Aphria exclusively. LATAM Holdings Inc. Subsequent to period-end, the Company completed the acquisition of LATAM Holdings Inc. ( LATAM ). The acquisition of LATAM provides the Company with immediate access to the high profile, attractive countries in South America and the Caribbean, including Colombia, Argentina, Jamaica and potentially Brazil. Colombia The acquisition of LATAM provides the Company with 90% ownership of Colcanna. This ownership provides the Company with the ability to further develop the global Aphria brand with Aphria branded products distributed to patients in Colombia. Upon Colcanna developing its 34 acres of land for the cultivation of cannabis, which is expected to provide 50,000 kgs annually, the Company will maintain the control of the cultivation and distribution of cannabis in Colombia. Until the emerging Colombian market demand grows to match the Company s Colombian production, the Company will be able to utilize its export licence to distribute the excess production globally. Argentina The acquisition of LATAM provides the Company with sole ownership of APB, providing the Company with a significant firstmover advantage, as APB is the first company with an in-country medical cannabis research licence. The Company also 30