The company behind a “brain fitness app” is pushing back against claims that it owes a technology firm in Durham hundreds of thousands of dollars.
Startup services firm Pathos Ethos filed a lawsuit against BrainTap Technologies earlier this year, claiming it built an app in exchange for company stock — only to have BrainTap suddenly allege the shares were invalid. But in an answer and counterclaim filed recently, BrainTap pushes back on those allegations, denying it ever “refused to pay” for Pathos Ethos services that were actually performed.
BrainTap also names its former CEO, Nick Zaldastani, in a third party complaint, shifting the blame when it comes to the allegedly invalid shares. The company, based in New Bern, claims it terminated statements of work with Pathos Ethos because Pathos failed to perform under the master services agreement.
BrainTap describes itself in the lawsuit as a “cutting-edge brain fitness startup that seeks to harness the power of rod mobile application platforms to improve its subscribers’ brain functions and neuroplasticity.”
In 2018, BrainTap hired Zaldastani as CEO, paying for him to relocate to Durham, according to the suit. In 2019, Zaldastani began working with Pathos Ethos. BrainTap would paid the firm $10,000 under the first contract, according to the lawsuit. Multiple agreements were executed, such as another where BrainTap agreed to pay $3,000 per month. BrainTap claims it paid Pathos Ethos for services rendered.
Then in 2021, Zaldastani and Pathos Ethos executives presented a plan for Pathos Ethos to make a $100,000 capital investment in the company, the lawsuit says. But it never happened. Instead, Pathos Ethos “wrongly billed BrainTap $100,000 for the services it allegedly provided from October 2021 through 2022,” according to the lawsuit.
Zaldastani issued nearly 75,00 shares of BrainTap stock to satisfy the charges, but did not have the approval or knowledge of the company’s board, according to the counterclaim. The lawsuit says that Zaldastan and Pathos Ethos concealed the issuance of the shares from board members and executives. BrainTap, apparently not knowing of the stock arrangement, paid some of the invoices.
When it discovered the share issuance, BrainTap requested that Pathos Ethos provide it with documentation that would substantiate the shares were valid. But it claims in the suit it never received any documentation.
“Pathos Ethos never provided any services to BrainTap worth $100,000 that it was not otherwise compensated for,” the counterclaim says.
The counterclaim was filed by attorney Chris Edwards on May 28.
Edwards did not respond to a request to comment. Jim White, the attorney representing Pathos Ethos, declined to comment.
A law firm, Ward & Smith, initially a defendant in the case, is no longer involved in the lawsuit.