Good morning. Welcome to the annual general and special meeting of Avicanna Inc. Mr. Chairman, please go ahead.
Good morning. Welcome to the annual and special meeting of the shareholders of Avicanna Inc. I'm Dr. Chandrakant Panchal, Chairman of the Corporation's Board of Directors. We are conducting the meeting on the Lumi virtual shareholder meeting platform. The Lumi platform will allow registered shareholders to vote on any matters at this meeting that they have not already voted on by proxy. I would now like to call this meeting to order.
Appointment of the chairman. Pursuant to the corporation's articles, as chairman of the board of directors of the corporation, I will preside as chairman of this meeting. Appointment of the secretary and scrutineer. As Chairman of the meeting, I ask that Stephen Kim, the Chief Legal Officer of Avicanna USA Inc., to act as secretary of this meeting, and Arlene Agnew of Odyssey Trust Company to act as scrutineer.
I now turn the meeting over to Stephen for a brief statement on forward-looking information that may be discussed at the meeting and an explanation of the voting procedures. Stephen.
Thank you very much, Dr. Panchal. In the course of today's meeting, officers and/or directors of the corporation may, in their remarks or in response to questions, make certain statements which contain forward-looking information for the purposes of applicable securities laws.
Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based on our current beliefs, expectations, or assumptions regarding the future of our business, future plans and strategies, our operational results, and other future considerations.
Undue reliance should not be placed on any of these forward-looking statements. Forward-looking statements are subject to risks and uncertainties that may cause the actual results, performance, or achievements of the corporations or developments in the corporation's business or its industry to differ materially from the anticipated results, performance, achievements, or developments expressed or implied by such forward-looking statements.
A detailed discussion as to the risks of the corporation's business, including the outcome of any of our forward-looking statements, can be found in our public disclosure documents filed under the corporation's SEDAR profile at www.sedar, S-E-D-A-R, .com. Now, before commencing with the business of the meeting, I would like to comment on the voting procedures. Each shareholder is entitled to one vote for each one common share held by that shareholders on all matters to be considered at this meeting.
Certain matters to be presented at this meeting require a majority of approval of the disinterested shareholders holding at least 51% of the issued and outstanding common shares. We will conduct each vote at this meeting by way of vote cast on the Lumi platform and those previously submitted by proxy. I understand that the scrutineers have tabulated all the votes received prior to the voting cutoff.
If you have previously voted, you do not need to vote again when prompted. If by voting again, you will revoke any previous vote made prior to the voting cutoff. Thank you. Thank you for the opportunity to share that, Dr. Panchal. Please let me turn this back to you to discuss the notice of meeting.
Thank you, Stephen. Notice of this annual and special meeting of the shareholders was sent to all shareholders of record as of the close day of business on April 10th, 2023. Proof of mailing of the notice of meeting and accompanying forms of proxy and management information circular have been duly filed.
I direct that a copy of the notice of meeting with proof of mailing be kept by the secretary with the record of this meeting. All shareholders should have previously received a copy of the notice of meeting, I would ask that someone move to dispense with the reading of the notice of the meeting. Stephen?
I so move.
Aras?
I second the motion.
All in favor? Any opposed? Motion carried. Quorum and constitution of the meeting. I have received the scrutineer's interim report, and the scrutineer has advised me that quorum is present at the meeting. I direct that the scrutineer's interim report and attendance be attached to the minutes of the meeting.
The scrutineer's interim report shows that there are present on this virtual meeting or represented by proxy 52 shareholders, including 23,139,483 voting rights attached to all issued and outstanding shares, representing 27.81% of the outstanding common shares. Since a quorum of shareholders is present, I declare the meeting to be duly called and properly constituted for the transaction of the business. Lumi platform voting for shareholders.
For the shareholders that did not vote by proxy, we will now open the voting on the Lumi voting platform for all of the resolutions detailed in the management information circular prepared in connection with this meeting. Particulars of the votes cast on all matters may be obtained from the secretary of the meeting after the meeting.
I direct that scrutineer's final report on all matters be annexed to the minutes of the meeting as scheduled. Financial statements. The financial statements of the corporation for the financial years ended December 31st, 2022 and 2021, together with a report of the auditors, were delivered to the shareholders who requested them, and copies are available at this meeting. It is not proposed to ask shareholders to approve the financial statements which have been placed before the meeting. Fixing number of directors.
We will now proceed with the first item for approval. Management has asked shareholders to approve of special resolution fixing a number of directors for the ensuing year at five members and empowering the board of directors of the corporation to adjust set numbers between meetings of shareholders by way of directors' resolution in accordance with the corporation's consenting documents.
Thank you, Dr. Panchal. I move that a special resolution, the text of which is disclosed in the management information circular of the corporation dated April 14th, 2023, fixing the number of directors for the ensuing year at five members and empowering the board of directors of the corporation to adjust such number between meetings of shareholders be approved.
I second the motion.
All in favor? Any opposed? Motion carried. Election of directors. We will now proceed with the election of directors. The management information circular prepared in connection with this meeting sets out the five individuals who have been nominated for election as directors. The nominees are Aras Azadian, Dr. Chandrakant Panchal, Giancarlo Davila Char, Eileen McCormack, and John McVicar.
There were no other nominations by the required deadline as set forth in the company's advanced notice bylaw number two. Will someone move that these five directors be elected as directors of the corporation to hold office until the next annual meeting of the shareholders or until their successors are elected or appointed?
Thank you, Dr. Panchal. I so move.
Thank you, Stephen.
I second the motion.
Thank you, Aras. All in favor? Any opposed? Motion carried. On behalf of the corporation, I would like to thank the directors for agreeing to stand for election. Appointment of auditors. The next item of business is the appointment of auditors. May I have a motion that Kingston Ross Pasnak LLP be reappointed as auditors of the corporation to hold office until the close of the annual meeting of shareholders, and that the directors be authorized to fix the auditors' remuneration.
Thank you, Dr. Panchal. I so move.
Thank you, Stephen. Aras? Do I have a seconder?
Apologies, I was on mute. I second the motion.
Thank you, Aras. All in favor? Any opposed? Motion carried. Approval of inside warrant amendments. The next item of business set up the management information circular of the corporation is to approve, on a disinterested basis, the amendment of the terms of 136,250 common share purchase warrants held by ThreeD Capital.
The warrants will be amended to reduce the exercise price from CAD 1.10 per common share to CAD 0.55 per common share, and to extend the expiry date from January 28, 2025 to January 28, 2026. Pursuant to the policy of the Toronto Stock Exchange, the inside warrant amendments are subject to approval of the disinterested shareholders of the corporation, for purposes of which any votes attached to any common shares beneficially owned by ThreeD Capital Inc.
Its associates and affiliates will be excluded from voting. If disinterested shareholder approval is not obtained, the inside warrant amendments will not be affected. May I have a motion that the aforementioned resolution, as more particularly set forth in the management information circular of the corporation relating to the approval of the inside warrant amendments, be approved.
Thank you, Dr. Panchal. I move that the aforementioned resolution, the text of which is disclosed in the management information circular of the corporation dated April fourteenth, 2023, Approving the insider warrant amendments be approved.
Thank you, Stephen.
I second the motion.
Thank you, Aras. All in favor? Any opposed? Motion carried. Approval of name change. The next item of business set out in the management information circular of the corporation is to approve on a disinterested basis the corporation to change the name of the corporation in, to such name as the board and its discretion may resolve and may be acceptable to applicable regulatory authorities if required.
May I have a motion that the aforementioned resolution, as more particularly set forth in the management information circular of the corporation relating to the approval of the name change be approved.
Thank you, Dr. Panchal. I move that the aforementioned resolution, the text of which is disclosed in the management information circular of the corporation, dated April 14th, 2023, approving the name change be approved.
Thank you, Stephen.
I second the motion.
Thank you, Aras. All in favor? Any opposed? Motion carried. Approval of Early Warrant Exercise Incentive Program. The next item of business set out the management information circular of the corporation is to approve the corporation's Early Warrant Exercise Incentive Program, as described in the management information circular, and the participation of certain insiders of the corporation therein the Warrant Incentive Program.
Pursuant to the policies of the TSX, disinterested shareholder approval is required in order to implement the Warrant Incentive Program and for warrant holders who are insiders to participate in the Warrant Incentive Program. For purpose of which any votes attached to any common shares beneficially owned by the warrant holders who are insiders of the corporation and their respective associates and affiliates will be excluded from voting.
May I have a motion that the ordinary resolution, as more particularly set forth in the management information circular of the corporation relating to the approval of the warrants incentive program be approved.
Thank you, Dr. Panchal. I move that an ordinary resolution, the text of which is disclosed in the management information circular of the corporation, dated April 14th, 2023, approving the warrant incentive program and participation of certain insiders therein be approved.
Thank you, Stephen.
I second the motion.
Thank you, Aras. All in favor? Any opposed? Motion carried. Other business and conclusions. If there is no further business, will someone move to conclude this meeting of the shareholders of Avicanna Inc?
Thank you, Dr. Panchal. I so move.
Thank you, Stephen.
I second the motion.
Thank you, Aras. All in favor? Any opposed? Motion carried. I therefore declare the formal part of the annual and special meeting of the shareholders concluded. The results of the meeting will be available online on SEDAR.
We would like to thank each of you for attending today and for your ongoing support of the corporation. I would now like to turn the presentation over to Aras Azadian, a Director and Chief Executive Officer of the corporation, to provide a corporate presentation and an update, business update. Aras, it's all yours.
Thank you, Dr. Panchal. Good morning, everyone. Thank you for joining our 2023 annual general meeting this morning. I'm happy to provide a short corporate overview. I will be joined by my colleague, Phil, our Chief Financial Officer, who will be providing some perspective related to our finances.
While the global economy, more specifically the biopharmaceutical sector and the cannabis industries, continue to face difficult times, we are proud to share that we are continuously making progress across our commercialization efforts, our R&D pipeline, and have optimized our business model, which will be reflected through some of the financial results that we're gonna be presenting. From the Canadian market perspective, Canada remains our current focus and priority.
This is where the majority of our revenue is generated, and we continue to expand our commercial reach across retail and medical channels, where we now have 117 commercial listings for our proprietary cannabinoid-based products.
We are also operating with an asset-light model in which production moving forward is outsourced from Canadian licensed producers, which allows the company to commercialize and scale its IP and products efficiently and allow for healthy margins against the backdrop of the proprietary differentiated nature of various products and formulations.
We're also excited about the Shoppers Drug Mart transition that we recently announced with Medical Cannabis by Shoppers, in which we're acquiring the business assets, and Avicanna will be providing patients access to a robust medical cannabis platform through MyMedi.ca.
MyMedi.ca is being built out as Avicanna's medical cannabis care platform, formed with the aim to better serve medical cannabis patients' needs, enhance the overall patient journey, and provide a complete package. MyMedi.ca will feature scientifically curated products from Avicanna and others. We'll include patient support programs and educational resources to support the incorporation of medical cannabis into the healthcare regimen.
Since the initial announcement between Shoppers Drug Mart and Avicanna has been coordinating with various stakeholders, including the medical community, specialty clinics, and leading Canadian licensed producers to ensure continuation of care for the existing patients as we transition them into MyMedi.ca.
Shoppers and Avicanna have been coordinating, collaborating to develop a seamless process related to the information and patient consent transfer with the view towards minimizing the efforts required by patients and their healthcare providers throughout this transition.
As we previously announced, we have also contracted with a Canadian licensed producer, Northern Green Canada, to support the operations and fulfillment where the inventory of the products will be managed. The fulfillment will take place for the patients in terms of the orders. In terms of commercialization efforts, internationally, we have rightsized our operations and are focusing on the company's long-term business model of international pharmaceutical preparations and our pipeline pharmaceutical products.
Our operations in South America facilitate the production of our topicals and pharmaceutical preparations that incorporates our proprietary active pharmaceutical ingredients, our API, and contributes towards competitive pricing for international markets. Avicanna continues to develop its international footprint, which includes completed commercial transactions into what is now in 19 international markets.
We believe that the international footprint, in combination with our intellectual property, our low-cost vertical integration, solidify our position to compete at a global or level where the evolution of cannabinoid laws are expected to continue.
From an R&D perspective, we've spent the last six years on product development, preclinical, clinical development of cannabinoid-based products. Avicanna has a history and has established scientific platform that continues to develop intellectual property.
Our focus on product development, evaluating the potential role of cannabinoids for therapeutic benefits, has been the central focus of the company's vision since inception. We take pride that through the scientific platform and the translational sciences, we have delivered 30+ commercial products internationally. We are currently focusing also on three real-world observational clinical trials in which we expect and anticipate will be completed during 2023.
This includes University Health Network study on chronic pain, Santé Cannabis study on local inflammatory pain, and Hospital for Sick Children study on epidermolysis bullosa. In addition to that, we are conducting preclinical and discovery projects with some of the top academic and clinical institutions in Canada. I'll now pass this over to Phil to provide a financial overview, and then we'll discuss what we believe the future holds for Avicanna to conclude. Phil?
Thank you, Aras. Good morning. I'm happy to provide an update on the financial results and improvements during 2022. We finished 2022 and began 2023 with some povert-positive operating improvements. This included adjusted EBITDA loss of CAD 7.3 million for the year, which is an improvement of 35% from the prior year, and revenue for the year of CAD 4 million, which is up 25% from 2021.
In Canada, we nearly doubled the number of finished units sold from 65,000 units in 2021 to 125,000 units in 2022, and more than doubled the number of medical and adult use products listed on Canadian markets from a total of 35 listings in 2021 to 84 by the end of 2022.
Internationally, the company entered into multiple strategic licensing and supply agreements, which grant our licensing partners exclusive rights to sell products in their given markets. As a result of these arrangements, license revenue was CAD 1.1 million in 2022, compared to CAD 400,000 in the prior year.
The company has continued to reduce operating costs and optimize the operations while continuing to grow sales and execute on our business plan. This included the reduction of headcount during 2022, bringing in more professional services in-house and working on our working capital needs. Operating expenses were CAD 9.2 million for the year end of 2022, a decrease of 22% from the prior year.
In the most recent quarter, our operating costs were CAD 1.7 million, our lowest since at least 2019, and 13% lower than the same quarter in 2022. To further improve our working capital position, we have brought down our accounts payable balance by 35% in 2022, a decrease of approximately CAD 2.5 million from 2021. During the most recent quarter end, we reported a working capital deficit of CAD 3.4 million, a further improvement from our deficit of CAD 4.3 million at the end of 2022.
Though we expect to operate solely on operating cash flows in the future, currently we continue to be funded primarily from third-party sources. In 2022, we closed four private placements, which raised net cash proceeds of CAD 9.1 million and one convertible debenture issuance raising CAD 1.8 million.
Though the company has produced positive results, we continue to see additional opportunities to grow our revenue and scale our business to improve our financials and work towards a path to profitability. Thank you.
Thanks, Phil. As we look forward, we're excited about various business units and market opportunities that I would like to highlight. In Canada, growth is anticipated to be driven by the additional marketing and sales efforts that we are adding during 2023 to the 117 commercial listings that we have. Also through the expansion of proprietary products, including a very much anticipated launch of our self-emulsifying drug delivery system technology in the form of capsules and tablets, which we believe can be utilized for the Canadian market but also international markets.
We are now operating in a CapEx lean model or asset light model and less need for working capital, which allows us to remain focused on our long-term business models. Which is investing in research, clinical work, and of course, marketing and sales, while scaling the rest of our business internationally.
We are also very excited about the transition of Medical Cannabis by Shoppers business and the launch of our own MyMedi.ca. We believe that we can build on the patient base and experience of Shoppers Drug Mart team and establish MyMedi as a standard for complete medical cannabis care. We believe the platform is expected to have additional strategic value for the company, including access to further data, enhanced relationships with various stakeholders, including the medical community licensed producers, but also ability for us to better market our own products, which includes today 23 SKUs onto the platform. As for our majority-owned subsidiary in Santa Marta, Santa Marta Golden Hemp, we're seeing emerging international cannabinoid opportunities that are growing with focus on medical and pharmaceutical products, which allows us an opportunity to be exporting potentially those products.
Thank you for your time and allowing us the chance to provide you with the corporate overview and your attendance today. We are open to questions. I will turn over to Ernesto Castilla, our Legal Director and Assistant Corporate Secretary, to see if there's any. Ernesto?
Thank you, Aras. We'll give a couple of seconds to see if anyone submits a question or a comment. Aras, no questions or comments have been submitted.
Thanks, everyone.