Item 4.01 Changes in Registrant's Certifying Accountant.
On January 7, 2020, Healthcare Integrated Technologies, Inc. (the "Company")
dismissed Marcum LLP as our independent registered public accounting firm and
engaged Rodefer Moss & Co. PLLC as our independent registered public accounting
firm. The dismissal of Marcum LLP was approved by our Board of Directors. Marcum
LLP did not resign or decline to stand for re-election.
Marcum LLP had served as our independent registered public accounting firm since
September 12, 2018. During the time that Marcum LLP served as our independent
registered public accounting firm, we did not timely file financial statements
or provide information for Marcum LLP to be able to complete its audit of our
financial statements dated July 31, 2018 or July 31, 2019 and the reviews of any
interim financial statements for the quarterly periods of those fiscal years.
As a result, no report of Marcum LLP contained an adverse opinion or a
disclaimer of opinion, or was qualified or modified as to uncertainly, audit
scope, or accounting principles, as no reports were filed.
During our two most recent fiscal years preceding our decision to dismiss Marcum
LLP we had no disagreements with the firm on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope of
procedure which disagreement if not resolved to the satisfaction of Marcum LLP
would have caused it to make reference to the subject matter of the
disagreement in connection with its report.
During our two most recent fiscal years prior to retaining Rodefer Moss & Co.
PLLC (1) neither we nor anyone on our behalf consulted Rodefer Moss & Co. PLLC
regarding (a) either the application of accounting principles to a specified
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on our financial statements or (b) any matter that was the
subject of a disagreement or a reportable event as set forth in Item
304(a)(1)(iv) and (v), respectively, of Regulation S-K, and (2) Rodefer Moss &
Co. PLLC did not provide us with a written report or oral advice that they
concluded was an important factor considered by us in reaching a decision as to
accounting, auditing or financial reporting issue.
We provided Marcum LLP with a copy of this Current Report on Form 8-K prior to
its filing with the Securities and Exchange Commission and requested that the
firm furnish us with a letter addressed to the Securities and Exchange
Commission stating whether they agree with the statements made in this Current
Report on Form 8-K, and if not, stating the aspects with which they do not
agree. A copy of the letter provided by Marcum LLP is filed as Exhibit 16.1 to
this Current Report on Form 8-K.
Item 5.02 Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On October 8, 2019, we appointed Charles B. Lobetti, III as our Chief Financial
Officer. In connection with his appointment, Mr. Lobetti entered into a three
year employment agreement with us.
Charles B. Lobetti, III., 57., Mr. Lobetti holds both Bachelor of Science in
Business Administration (1985) and Master of Accountancy (1986) degrees from the
University of Tennessee and is a Certified Public Accountant (Inactive) in the
State of Tennessee. Upon graduation, Mr. Lobetti accepted a position in the tax
department of the Tampa, Florida office of Ernst & Young where he progressed to
Senior Tax Consultant before he left the firm in 1989 to return to his hometown
of Knoxville, Tennessee as the Tax Manager with a progressive, local accounting
firm. In 1990, Mr. Lobetti, along with two co-workers, formed the accounting
firm of Lobetti, Ideker & Reel ("LIR") where he served as President and Director
of Tax Services. LIR was a member of the AICPA's SEC Practice Section and served
several SEC registrant clients. In 1998, Mr. Lobetti left LIR to accept the
position of Chief Financial Officer of United Petroleum Corporation ("UPET"), a
small cap, SEC registrant oil and natural gas development company and
convenience store operator. Following his tenure at UPET, Mr. Lobetti serviced
as Chief Financial Officer for a boutique investment banking/private equity firm
specializing in the placement and funding of Regulation D and Regulation S
offerings. He spent the next 10-years working in various investment banking,
commercial mortgage banking and commercial banking functions before accepting
the position of Controller - Alaska Operations with Miller Energy Resources,
Inc.("Miller"), a SEC registrant oil and gas exploration and production company.
Shortly after accepting the position in 2011, Mr. Lobetti was promoted to
Corporate Controller and thereafter appointed Treasurer in 2012. Since leaving
Miller in 2014, Mr.
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Lobetti enjoyed spending time with his family and working part-time in
commercial mortgage banking until recently accepting the positions of Chief
Financial Officer of Healthcare Integrated Resources, Inc. and Blue Earth
Resources, Inc.
As compensation, we agreed to pay him an annual salary of $52,000 and he is
entitled to discretionary bonuses as may be awarded from time to time by our
Board of Directors. As additional compensation we granted him stock options to
purchase 600,000 shares of our common stock at an exercise price of $0.15 per
share which was the closing price of common stock as reported on the OTC Markets
on the date immediately preceding the date of this Agreement. The exercise price
was less than the fair market price of our common stock on the date of grant.
The options vest in equal annual installments commencing on the grant date.
The vesting date of any unvested options accelerates in the event of a Change
in Control (as defined in the Employment Agreement). Mr. Lobetti is also
entitled to paid vacation and sick leave, an automobile allowance and
participation in any employee benefit plans or programs we may offer. The
initial term of the Employment Agreement will automatically renew for an
additional one year term unless either party provides notice of non-renewal.
The Employment Agreement terminates upon the death or disability of Mr. Lobetti,
and may be terminated by us for cause, or by Mr. Lobetti for any reason. If the
Employment Agreement is terminated for by us for cause, upon his death or
disability, at non-renewal or by Mr. Lobetti, he is only entitled to receive
base salary accrued but not paid through the date of termination, and in the
case of termination due to death or disability, a pro rata payment of the annual
incentive earned for the year of termination. If the Employment Agreement is
terminated by us without cause or by Mr. Lobetti for good reason, we are
obligated to pay him severance equal to one year's base salary and any unpaid
incentive compensation. In addition, if at any time during the term of the
Employment Agreement Mr. Lobetti's employment is terminated by us without cause
within two years after a Change in Control of our company, or in the 90 days
prior the Change in Control at the request of the acquiror, we are obligated to
pay him an amount equal to 2.99 times his annualize compensation. "Change in
Control" is defined in the Employment Agreement to mean the acquisition by any
person of beneficial ownership of our securities representing greater than 50%
of the combined voting power of our then outstanding voting securities.
The Employment Agreement contains customary invention assignment, non-compete
and non-solicitation provisions. The descriptions of the terms and conditions of
the Employment Agreement with Mr. Lobetti and the stock option granted to him
there are qualified in its entirety by reference to agreements which are filed
as Exhibits 10.1 and 10.2, respectively, to this report.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits.
Exhibit No. Description
10.1 *¥ Employment Agreement between Healthcare Integrated Technologies, Inc.
and Charles B. Lobetti, III
10.2 * Form of stock option dated October 8, 2019 granted to Charles B.
Lobetti, III
16.1 * Letter from Marcum LLP dated January 11, 2020
* Filed herewith.
¥ Management compensation agreement.
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