Nutriband says lawsuit over ended offering engagement remains in discovery

Nutriband Inc. (Nasdaq: NTRB) said in its quarterly report for the period ended July 31, 2026 that a 2023 lawsuit over an ended offering engagement remains in discovery. The case, in the Supreme Court of the State of New York, New York County, is Index No. 654633/2023. The plaintiffs are Joseph Gunnar, LLC, a New York broker-dealer, and Lucosky Brookman LLP, which acted as Gunnar's attorneys during the relevant period. The 10-Q says Nutriband is a defendant. It does not list the other defendants, and the 10-K and 10-Q describe the case in similar terms.

The defendants and the claims

Nutriband's 10-Q for the quarter ended October 31, 2023 listed all of them: the company; Gareth Sheridan, chief executive and a director; Serguei Melnik, president and a director; Vitalie Botgros, a stockholder; TII Jet Services LDA, an aircraft leasing firm; and Wolf Blitz, Inc., a consulting company. Nutriband was served on September 21, 2023. The recent filings do not say whether all of them remain in the case.

The complaint arises from Nutriband's decision to end, in or about July 2023, an April 6, 2023 engagement letter under which Gunnar would have been sole underwriter of a public offering of Nutriband common stock. Nutriband says it declined to proceed because of market conditions, before any underwriting agreement was signed.

These are allegations. The complaint alleges breach of contract against the company, Sheridan and Melnik, along with fraudulent inducement, fraudulent statements, fraudulent concealment of a search for alternative financing, and negligent misrepresentation. It alleges tortious interference against Jet Services, Botgros and Wolf Blitz, and promissory estoppel against all defendants other than Jet Services. Gunnar seeks actual and compensatory damages exceeding $500,000, plus exemplary and punitive damages. Lucosky Brookman seeks attorneys' fees, costs and expenses under indemnification obligations in the engagement letter.

Nutriband's defense and counterclaims

Nutriband denies the claims. It says the engagement letter is unenforceable and, even if it is enforceable, was properly terminated. Counsel for the company filed an answer and counterclaims in or about November 2023. Its annual report says the counterclaims are against Joseph Gunnar & Co. for intentional interference and breach of fiduciary duty, seeking $1,000,000 for each claim and a declaratory judgment that the termination was justified. The plaintiffs have denied those counterclaims and say they have a right to be reimbursed for fees spent responding to them.

The filings say there are no pending hearings or motions. In early 2024, the plaintiffs proposed a settlement offer of $100,000, which the company says it has not answered. In the 2023 10-Q, Nutriband said it could not reasonably estimate a range of loss, and that management considered it "reasonably possible" that some claims may ultimately result in a loss. Management then believed any loss would not have a material effect on its financial position, and the company had not accrued any amount for possible loss.

The financial setting

The suit is small beside the company's cash needs but not trivial. At July 31, 2026, Nutriband held cash and cash equivalents of $3,421,615 and working capital of $2,912,335. For the six months it reported revenue of $870,913, down from $1,289,884, a loss from operations of $2,144,988 and cash used in operations of $1,148,103.

For the year ended January 31, 2026, the 10-K reports a net loss of $8,229,632, cash used in operations of $5,134,630 and cash of $4,574,857. Financing provided $5,403,092, primarily from the exercise of warrants. Management says it expects enough funds to be generated from operations to fund the business for a year and that substantial doubt about continuing as a going concern is alleviated.

Nutriband's lead product candidate is AVERSA Fentanyl, an abuse-deterrent patch developed with Kindeva Drug Delivery. Its revenue comes from its Pocono Pharmaceuticals and 4P Therapeutics subsidiaries. The company's earlier plan to sell Pocono for $5 million was terminated on February 13, 2026.

What is open

The filings give no trial date and no ruling. Until a court rules or the parties settle, the filings leave open whether the company or its officers will owe anything.

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