Marketer Sues VIC Firm for Alleged Unpaid Compensation

Kimberley Fuller, who spent six years as director of market research and business development at VIC Technology Venture Development in Fayetteville, has fired off a breach of contract lawsuit, and the name at the other end is a bit of a surprise (at least to Whispers) — VIC’s founder and CEO, Dr. Calvin Goforth.

Also named as a defendant is Nutraceutical Innovations Inc., a portfolio company of VIC, a private technology venture development firm that has raised millions in capital since it was launched in 2001, and has created and incubated over 15 high technology companies during that period.

Fuller, who worked for VIC from 2006 to 2012, is now the president and CEO of her own market research firm, Discovery Associates LLC. In her complaint, she claims Nutraceutical and Goforth owes her company nearly $20,000 for conducting market research in support of two Nutraceutical Innovations products. Nutraceutical hired Discovery Associates to perform the research in March 2014, just a few months after Fuller started the company.

Goforth, according to the complaint, told Fuller that money would be tight, and suggested that equity could be offered rather than a cash payment. When Fuller delivered a work proposal, she said she wasn’t interested in equity, and instead proposed a 20 percent reduction in the upfront fee in exchange for 10 percent royalty on any sales in the future.

Goforth again said there wasn’t enough money to pay Fuller’s company in full, but that Nutraceutical was willing to pay some money up front and also sign a convertible note, a debt instrument that can be exchanged into equity at a future date, and a common method used to fund work being performed for early stage startups that typically do not have the funds necessary to pay for the work.

In this case, Goforth said if the research to be performed by Fuller’s company revealed the commercial viability of technology, then Goforth believed he had investors ready to invest, if they saw evidence of market interest. If this occurred and investors invested in Nutraceutical, then Fuller could either be paid in cash or company shares. Fuller asked Goforth to personally guaranty the convertible note which he declined to do. 

For more than a year, Fuller performed market research and continued to pursue companies that might be interested in the Nutraceutical products, but those efforts were not successful, according to the suit.

Now, after contract addendums and additional convertible notes, Fuller says she has only received partial payment for the market research.

“Plaintiff has delivered market research, as contracted, and expects to get paid for the work it has performed,” the lawsuit states. “Defendants paid plaintiff one-half ($10,000) up front and also $3,000 of the project expansion fee, but have failed to pay the remaining half, plus the remainder of project expansion fee, plus agreed upon interest.

“Defendants have breached the agreement by failing to pay plaintiff the sum of second half of the initial contract fee, plus interest ($19,140). The second of the two notes agreed under by parties, which comes due on Sept. 15, 2016, is for an additional $6,500, plus interest (if paid on time as interest accrues). The second note represents an extension of the initial scope of work.”

Independent of her own claim, Fuller also alleges that Nutraceutical owes others creditors more than $200,000.

“Goforth has acted in his own best interest, rather than that of [Nutraceutical Innovations], running up a huge debt amounting to over $200,000, rather than honoring his obligations to creditors such as [Discovery Associates].

“Goforth has entered into contracts with creditors of [Nutraceutical Innovations], knowing he would not pay the debt off.”

The lawsuit was filed June 2 in Washington County Circuit Court. Debby Winters, principal with the Winters Law Firm of Fayetteville, is serving as Fuller’s counsel.

In yet another degree of separation, Winters also used to work for VIC, serving as patent attorney and in-house counsel from 2006 to 2011.

When reached by telephone, Winters offered no comment from the plaintiff’s side.

Goforth, however, did provide this statement about the matter:

“Kimberley Fuller holds a convertible note from Nutraceutical Innovations that became due in April 2016 for payment or conversion to equity. The fee for the work she undertook for Nutraceutical Innovations was a combination of a cash payment and the convertible note. The required and agreed to cash portion of her work was paid in full, which is undisputed. As is clear even from her own legal filing, Kimberley was aware that the ability of the company to pay the convertible note off in cash, rather than convert it to equity, would depend on the results of her research and success of related marketing efforts for which she was being contracted. 

“Unfortunately, the results of the research and associated marketing efforts were not successful and at present the company is not in a position to pay the amount currently due under the convertible note. It is an unsecured obligation of the company that I am not even personally a party to or have any obligation to pay. The company is presently evaluating its options for moving forward.”