Vertical farming company misrepresented its plans for $4M in funds, BCSC alleges

The B.C. Securities Commission logo in an undated file photo.

Update, June 26, 2024: A panel of the BCSC has dismissed the allegations against all three individuals and the company. Read more here. The original story follows.

A Vancouver-based vertical farming company and three of its officials are accused of misrepresenting their plans for nearly $4 million in funds the company raised in 2018.

Affinor Growers Inc. issued two news releases that year about a roughly $4-million private placement, but did not disclose that it intended to immediately spend more than 90 per cent of that total on consulting fees, according to the B.C. Securities Commission.

The BCSC's allegations against the company and its CEO, CFO and one of its directors have not been proven. 

According to the commission, Affinor issued a release on March 5, 2018, announcing the $4 million and saying that "proceeds would be used to fund Affinor’s operations and corporate development and for general working capital."

Then, on March 8, 2018, the company issued a second release saying that it had closed the private placement's first tranche of $3,999,666, again describing the proceeds as funding operations, corporate development and general working capital.

The BCSC says neither release acknowledged that the company would retain only about $325,000, or eight per cent of the total, with the rest being immediately spent on consulting fees.

According to the commission, the company's failure to disclose that it would not be keeping all of the funds means that Affinor made statements to investors that it knew - or reasonably ought to have known - were misrepresentations.

The commission also alleges that three men - Affinor CEO Nicholas Gordon Brusatore, of Abbotsford, director Brian Kent Whitlock, of Langley, and CFO Usama Zafar Chaudhry, of Surrey - committed the same violations of the B.C. Securities Act by virtue of their roles with the company.

The respondents are required to appear before the commission on March 24 if they want to be heard before the commission schedules a hearing date in the case.