Good morning. Welcome to the Annual Meeting of Shareholders of Avicanna Inc. I am Stephen Kim, the Global Chief Legal Officer of Avicanna USA, a wholly owned subsidiary of Avicanna. 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 turn to Aras Azadian, CEO and Director of Avicanna, to call this meeting to order. Aras.
Thank you, Stephen. Pursuant to the corporation's articles and corporate governance documents, as Lead Director of the Board of Directors of the corporation, I will preside as the Chairman of the meeting. As the Chairman of the meeting, I ask Stephen Kim, Chief Legal Officer of Avicanna USA, to act as Secretary of this meeting and Stacy DeCamp of Odyssey Trust Company as a 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 voting procedures.
Thank you, Aras. In the course of today's meeting, officers and/or directors of the corporation may, in their remarks or response to questions, make certain statements which contain forward-looking information for purposes of applicable securities law. Forward-looking information or 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 conditions. 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 corporation, or developments in the corporation's business or its industry to differ materially from anticipated results, performance, achievements, or developments expressed or implied by such forward-looking statements.
A detailed discussion of 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.sedarplus.ca. Before commencing with the business of the meeting, I would like to comment on the voting procedure. Each shareholder is entitled to one vote for each common share held by that shareholder on all matters to be considered at this meeting. Certain matters to be presented at this meeting require majority 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 votes previously submitted by proxy. I understand that the scrutineers have tabulated all of the votes received prior to the voting cutoff.
If you have previously voted, you do not need to vote again when prompted. By voting again, you will revoke any previous vote made prior to the voting cutoff. Now I will turn to Aras Azadian to briefly discuss the notice of meeting. Aras.
Thank you, Stephen. Notice of this annual and special meeting of the shareholders was sent to all shareholders of record as of close of business on June third, 2025. Proof of mailing of the notice of the meeting and accompanying forms of proxy and management information circulars have also been duly filed. I direct that a copy of the notice of meeting with proof of mailing be kept by the Secretary with the records of this meeting. As 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 meeting.
I so move.
I second the motion. All in favor? Any opposed? Motion carries. Quorum and constitution of meeting. I have received the scrutineer's interim report, and the scrutineer has advised me that the quorum is present at the meeting. I direct that the scrutineer's interim report on attendance be attached to the minutes of this meeting. The scrutineer's interim report shows that there are present on this virtual meeting, or represented by proxy, at least 51 shareholders holding a combined of at least 41,722,914 voting rights attached to all issued and outstanding shares. This represents at least 36.66% of the outstanding common shares. Since quorum of the shareholders is present, I declare the meeting to be duly called and properly constituted for the transaction of business.
For those shareholders who did not vote by proxy, we will now open the voting on Lumi Voting Platform for all the resolutions detailed in the management information circular prepared in connection with this meeting. Particulars of votes cast on all the matters may be obtained from the secretary after the meeting. I direct that the scrutineer's final report on all matters be annexed to the minutes of this meeting as scheduled. The financial statements of the corporation for the financial years ended December 31st, 2024 and 2023, together with a report of auditors were delivered to 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. I will now proceed with the first item for approval, which is the election of directors.
The management information circular prepared in connection with this meeting sets out five individuals who have been nominated for election as directors. The nominees are Aras Azadian, Giancarlo Davila Char, Paul Fornazzari, Eileen McCormack, and John McVicar. There were no other nominations by the required deadline as set forth in the company's advance notice bylaw. 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?
I so move.
I second the motion. All in favor? Any opposed? Motion carries. On behalf of the corporation, I would like to thank the directors for agreeing to stand for election. The next item of business is the appointment of auditors. May I have a motion that Ramirez Jimenez International CPAs be reappointed as auditors of the company to hold office until the close of next annual meeting of the shareholders and the directors be authorized to fix the auditors' remunerations.
I so move.
I second the motion. All in favor? Any opposed? Motion carried. If there is no further business, we will now close the voting of the Lumi platform. Will someone move to conclude this meeting of the shareholders of Avicanna Inc?
I so move.
I second the motion. All in favor? Any opposed? Motion carried. I therefore declare the formal part of this annual meeting of shareholders concluded. The results of the voting of this meeting will be available online on SEDAR+. We would like to thank you all for attending today and for your ongoing support of the corporation. We are now turning to corporate update presentation, which I will provide as the Chief Executive Officer of the corporation. Thanks again for joining us. I'll provide a corporate update and a look into our future. We're pleased to have reported that 2024 was our most successful year-to-date, which was marked by improved financial results, continued advancements in our commercial platform, R&D, and clinical programs as well. This included CAD 25.5 million of revenue for the year ending December 31, 2024, which represents a 52% year-over-year growth from 2023.
This was driven by both Canadian and international business segments. We also started 2025 with even better results and further progress, including our first profitable quarter, which included net income of about CAD 74,000 and a comprehensive income of about CAD 876,000, which was driven by cost efficiencies and margin improvements. This also included our first significant adjusted EBITDA positive quarter of approximately CAD 432,000, which is a significant year-over-year improvement from about CAD 18,000 in Q1 2024. Gross margins improved to 57% in Q1 2025, up from 46% in Q1 2024. This was driven by portfolio optimization and significant increases in licensing and service revenue.
In addition to the financial progress that I just demonstrated, we continue to progress towards our path to self-sufficiency, but also we focused on the advancements that we made on the scientific and commercial platform, including advancements to all four of our business pillars, which I will expand on. From the Canadian side, Canada does remain our primary focus and first strategic market, where we have successfully established our scientific and commercial platforms. We firmly believe that progress and insights gained in Canada serve as a proof of concept for our future scale-up and international expansion plans. Over the past nine years, our R&D and clinical programs have been conducted exclusively in Canada. This consistent focus has resulted in what we consider an industry-leading scientific platform supported by a robust portfolio of proprietary products, patents, continued advancements in our evidence-based approach to cannabinoid-based medicine.
In parallel, over the last four years, we've continued to expand our commercial infrastructure in Canada. This includes now a growing portfolio of over 40 proprietary commercial products. This platform operates as an asset-light model, leveraging 10 different manufacturing strategic relationships who are specialized Canadian licensed producers. This includes the production of our RHO Phyto portfolio that has undergone extensive R&D, preclinical, and validation towards the quality and consistency standards that it should be expected from cannabinoid-based medicine. These advanced formulations span a range of CBD, CBG, and THC ratios, are offered in various delivery formats including drops, sublingual sprays, topical gels, creams, capsules, and a robust pipeline of extensions. The full portfolio is available through MyMedi.ca, our medical cannabis care platform, and other distinct medical cannabis platforms, including Spectra.
Making these standardized formulations accessible and available to patients has contributed to the generation of real-world evidence and insights, including feedback from patients and healthcare professionals. These real-world evidence and insights not only validate our approach to actively informing our pharmaceutical pipeline through ongoing trials, but also bridging the gap between cannabinoid-based medicine and traditional biopharmaceutical developments. In 2025, Avicanna continued its patient-first approach by optimizing the MyMedi.ca portfolio with innovative products from Avicanna's own pipeline and curated from selected medical cannabis companies. The platform offers a vehicle for education, collaboration with the medical community, including Sunnybrook's Cancer Center, Odette Cancer Centre, which is also dispensing our RHO Phyto products, and coverage by public and private insurance providers. Additionally, MyMedi works with eight provincial safety boards, including the Workplace Safety and Insurance Board, WSIB, and other insurance boards.
To further medical outreach, Avicanna initiated a comprehensive medical affairs campaign in Q1 2025 to enhance the gaps in education and to provide training amongst the Canadian healthcare professionals. We established a dedicated medical affairs team with the Canadian medical and scientific communities with the objective of providing information to help bridge the gaps of information between research and clinical applications. Our efforts include collaborations with several academic institutions and research organizations to generate the well-needed data and scientific understanding of medical cannabis. These efforts include healthcare provider, clinic, and hospital outreach with tailored education and training programs, development and dissemination of harm reduction strategies and assets to healthcare professionals and patients, support for observational real-world evidence studies and clinical development, and strategic relationships and collaborations with patient advocacy groups to support evidence-based care and improve patient outcomes.
This also includes educational webinars with emphasis on identifying clinicians for the areas of unmet medical needs. This also includes medical associations and the hosting of our fifth medical cannabis symposium, which took place here in Toronto on June 6, 2025. The theme of this symposium was Bridging Science and Clinical Practice, a gathering of thought leaders in cannabinoid medicine. This event was successfully hosted with over 400 participants, many of which were healthcare providers and physicians, researchers, and speakers that were key opinion leaders from around the world. Additionally, in service of medical affairs, in early 2025, we announced a scientific and medical affairs collaboration with Aspeya Switzerland SA. This scientific medical affairs collaboration with Aspeya Switzerland, formerly known as Vectura Fertin Pharma, which is a subsidiary of Philip Morris International, is aimed at facilitating research and medical affairs initiatives to the medical community in Canada.
The scientific and medical affairs collaborations prioritizes engagement with the medical community in Canada, patients, patient advocacy groups, and insurers to gain insight into the challenges associated with medical cannabis access. Our Canadian medical cannabis platform, which includes our products and MyMedi.ca, is a synergistic model that offers a comprehensive medical cannabis package, and this is something that we look to expand globally. As we look international, we continue to prioritize our operations to respond to the evolving medical cannabis space. Our expertise in navigating complex regulatory processes for commercialization has resulted in commercial exports to 22 countries already. Our international operations, specifically Avicanna LATAM SAS, are preparing for the manufacturing of our proprietary cosmetic and pharmaceutical products, including Trunerox, which is our first pharmaceutical that has obtained a medical authorization from Colombia in 2024. Trunerox is expected to be commercialized in Colombia and other Central American and Caribbean markets.
Trunerox is not approved by Health Canada and is not a drug in Canada. Our international efforts are also centered around cultivation and manufacturing of cannabinoid active pharmaceutical ingredients in Santa Marta, Colombia, all of which is under the Aureus brand. The Aureus brand of products have been commercialized and exported to 19 international markets and have been the API of record for three pharmaceutical products that have been approved, including our own Trunerox. Over the past year, however, we've substantially improved our agronomy and post-harvest capabilities as well in Colombia. This has resulted in premium organic flower for potential exports in developing markets within the European Union, U.K., and Australia. We believe that the fast-growing European and Australian markets will be an important focus for expansion initiatives of Aureus-branded products, but also our finished products such as the RHO Phyto-branded medical cannabis products.
In terms of R&D, with now nine plus years of research and development, preclinical, clinical development of cannabinoid-based medicine, Avicanna has established a leadership position and a scientific platform that continues to develop our intellectual property. Our R&D team continues to innovate and leverage our robust understanding of cannabinoid-based medicine, patient outcomes, and proprietary drug delivery systems to deliver these advanced products. This now includes 40+ products that are currently in the Canadian market and an extensive pipeline of medical and pharmaceutical products that are in development. Our development efforts are underpinned by a robust R&D platform, complemented by observational real-world evidence that help clinical decision-making as well as validating a therapeutic approach. Some key developments over the last year include the relaunch of a real-world evidence study that was initiated by MyMedi.ca with Dr. Hance Clarke from UHN.
This observational study is enrolling up to 1,000 patients in Canada to evaluate potential impact of medical cannabis on conditions such as pain, sleep, anxiety, depression, and now epilepsy. We also completed pediatric dermatology study at SickKids. This study evaluated Avicanna's 3% topical cream in patients with epidermolysis bullosa, a rare orphan disease, and was completed under the leadership of Dr. Elena Pope. The results were promising and showed improvements in wound healing and stability. This year or last year, we also expanded our intellectual property portfolio. This included U.S. Patent and Trademark Office grant of two patents to Avicanna, which included our deep penetrating topical cannabinoid formulation that's targeting musculoskeletal pain and inflammation, and a second patent that covers a proprietary drug delivery system that's a self-emulsifying drug system, SEDDS, for all cannabinoid products that are targeting neuropathic pain.
Recently, this year, we announced the sponsorship of our first phase II clinical study, which is a pilot phase II clinical study on osteoarthritic pain. This multi-center, blinded, randomized, placebo-controlled investigational study is also led by Dr. Hance Clarke and is conducted at UHN, Canada's largest medical institution. The primary objective of the RCT is to determine the feasibility of a blinded, randomized, placebo-controlled, three-arm parallel group for oral cannabinoids, improving pain interference in patients with hip, knee, and osteoarthritic related to osteoarthritis. Specifically, the RCT will look to discover whether the planned definitive RCT is feasible with respect to patient enrollment, protocol adherence, and data completeness. The RCT is funded by the Canadian Institutes of Health Research, CIHR grant, and is sponsored by Avicanna, which is providing our proprietary CBD and THC capsules under GMP. I'll now provide a quick summary of our financials, before we wrap- up.
For the year ending December 31st, 2024, as I mentioned, we had record revenue of CAD 25.5 million, which is a significant increase compared to CAD 16.8 million in 2023. This significant year-over-year revenue came as a result of a full year of revenue recognition from MyMedi.ca and increased international revenue, including licensing and services. Our gross profits was roughly CAD 12.9 million in 2024, representing a gross profit margin of 51% and a substantial increase from 2023 when the gross margin was 40%. This improved gross margin is supported by a large increase in service revenue as well as continuing improvements in our margins. In parallel, we had cost control measures that made significant improvements in reducing our reliance on external financing for operations. During 2024, operating expenses increased by only 17% over 2023, while our revenue increased substantially higher than that.
Our adjusted EBITDA was a loss of CAD 1.4 million during 2024, a substantial improvement from adjusted EBITDA of CAD 4.3 million in 2023. In addition to these improvements in our income statement, we continue to improve our balance sheet and working capital as well. In 2024, the company has eliminated all debt and repaid outstanding principal balance of CAD 1.3 million of its non-convertible debenture issued in August 2023. Additionally, we substantially decreased our liabilities by continuing to pay down aged vendor payables and external debt. As a result, we decreased our accounts payable by about CAD 1 million during 2024. As for early 2025, we have realized our first profitable quarter, as I mentioned earlier.
This was driven by noteworthy improvements in gross margins, which grew to 57% from 46%. Gross margins were improved, as I mentioned, by prioritizing commercial activities in addition to licensing and service revenue that has increased.
Our operating expenses decreased in Q1 2025 by approximately 10% when compared to Q1 2024. This decrease was largely attributed to reductions in professional fees and consulting, as well as compensation related to salaries and wages. Our working capital deficit also improved to CAD 1.3 million from - CAD 3.9 million in Q1 2024 as a result of using capital raised to pay off debts and inventory [inaudible ]. Due to these improvements in gross margins and operating expenses, the company was able to realize an EBITDA positive of CAD 430,000 in Q1 2025. This is a significant improvement when compared to CAD 18,000 in Q1 2024. As we look forward to the rest of 2025 and 2026, we are very pleased with the advances we have made, but also with the positive momentum we have now created.
With this foundation, we are now positioned to focus on scaling our Canadian operations, expanding internationally, but also advancing our R&D and intellectual property pipeline. I want to thank our team for their dedication and their grit. Also, I want to thank our shareholders for their unwavering support during the difficult last years. We believe the future is bright for Avicanna, and we're very excited to deliver that to the rest of you. Thank you for your time and for allowing us the chance to provide you the corporate overview at our annual AGM. We're open to questions, and we'll turn it over to Vanessa Castillo, Director and Assistant Corporate Secretary to field any questions about the ISS.
I have no questions at this minute.
Okay. As there are no questions, we will now conclude today's meeting and presentation. I just thank everyone for attending and participating. Goodbye.