Quarterly report pursuant to Section 13 or 15(d)

Document And Entity Information

Document And Entity Information - shares
6 Months Ended
Feb. 28, 2021
Apr. 19, 2021
Document Information Line Items    
Entity Registrant Name PETROTEQ ENERGY INC.  
Document Type 10-Q/A  
Current Fiscal Year End Date --08-31  
Entity Common Stock, Shares Outstanding   423,582,347
Amendment Flag true  
Amendment Description Petroteq Energy Inc. (“Petroteq” or the “Company”) is filing this Amendment No. 2 to Form 10-Q/A (this “Amendment”) to amend the Company’s quarterly report on Form 10-Q/A for the period ended February 28, 2021 (the “Original Filing”), originally filed by the Company with the Securities and Exchange Commission (“SEC”) on April 21, 2021. This Amendment restates the Company’s previously issued unaudited condensed consolidated financial statements and related note disclosures as of and for the three and six months ended February 28, 2021 and 2020. Background of Restatement On July 16, 2021, the independent members of the Audit Committee (with Mr. Alex Blyumkin abstaining, the “Audit Committee”) of the Board of Directors of the Company, after discussion with the Company’s Chief Financial Officer, concluded that: 1. the Company’s previously-issued financial statements (the “Periodic Financial Statements”) contained in the following periodic reports should no longer be relied upon: (a) the Company’s annual reports (each, an “Annual Report”) on Form 10-K for the financial years ended August 31, 2019 and August 31, 2020, originally filed on December 16, 2019 and December 15, 2020, respectively; (b) Amendment No. 1 to the Annual Report for the financial year ended August 31, 2020, originally filed on December 28, 2020; and (c) the Company’s quarterly reports on Form 10-Q for the periods ended May 31, 2019, November 30, 2019, February 29, 2020, May 31, 2020, November 30, 2020 and February 28, 2021, originally filed on October 7, 2019, January 21, 2020, June 3, 2020, July 20, 2020, January 19, 2021 and April 20, 2021; and (d) Amendments to the quarterly reports for the periods ended February 29, 2020, and February 28, 2021, originally filed on June 8, 2020 and April 21, 2021. 2. the Company’s previously-issued unaudited condensed consolidated financial statements for the three and six months ended February 28, 2019 and 2018 (together with the Periodic Financial Statements, the “Financial Statements”) contained in the original Filing should no longer be relied on. The Board of Directors has concurred with the conclusions of the Audit Committee. The Company had issued a secured promissory note dated December 27, 2018 (the “Note”) payable to Redline Capital Management S.A. (“Redline”) in the principal amount of $6,000,000, maturing 24 months following its date of issue, and bearing interest at the rate of 10% per annum based on a 360-day year. The Company’s obligations under the Note are purportedly secured by collateral consisting of the Company’s right, title and interest in certain federal oil and gas leases (the “Oil and Gas Leases”) relating to the Company’s Asphalt Ridge Project, pursuant to a security agreement between the parties dated December 27, 2018 (the “Security Agreement”). The Note had been issued pursuant to the terms of a settlement agreement between the parties dated December 27, 2018 (the “Settlement Agreement”) which purported to settle certain claims asserted by Redline against the Company. Shortly following the Settlement Agreement, in early 2019, Mr. Blyumkin, who was then the Company’s Executive Chairman, had indicated he undertook an internal review of the claims made by Redline and concluded that the Settlement Agreement, the Note and the Security Agreement are void and unenforceable, and that they did not have to be disclosed to the Board of Directors or to the Company’s Chief Financial Officer. Mr. Blyumkin has indicated he verbally advised Redline that the Company now considered the Settlement Agreement, and therefore the Note and the Security Agreement, to be void and unenforceable. However, no action was taken to document this position. Since maturity of the Note, on December 27, 2020, Redline has not filed any legal action to enforce payment of the Note. In response to a request from Staff at the Securities and Exchange Commission, Mr. Blyumkin determined that it was appropriate to raise the Settlement Agreement, the Note and the Security Agreement for consideration by the Company’s Chief Financial Officer and the Audit Committee, and, in particular, to review his conclusion that they did not have to be disclosed in the Financial Statements. The Audit Committee has determined that, notwithstanding the results of the internal review of Redline’s claims undertaken by Mr. Blyumkin in early 2019, the Settlement Agreement, the Note and the Security Agreement should have been disclosed, and that the obligations referenced in the Note should have been disclosed in the Financial Statements regardless of the Company’s position of their validity and enforceability. Special legal counsel was subsequently engaged by the Company to undertake a review of the Settlement Agreement, the Note and the Security Agreement with the view to determining whether they are enforceable (and, in particular, whether the Security Agreement has properly charged the Company’s right, title and interest in the Oil and Gas Leases as personal property, and whether any security interests purportedly granted pursuant to the Security Agreement have been perfected under applicable law), and whether the related liability should be classified as an actual or contingent liability. Based on the advice of such legal counsel, the Company has determined that the liability purportedly represented by the Note should be classified as a contingent liability. In addition to the above, the Company added additional disclosure relating to General Information disclosed in note 1, relating to deposits paid of $1,903,000 for the acquisition of 100% of the operating rights under U.S. federal oil and gas leases, administered by the BLM in Garfield and Wayne Counties covering approximately 8,480 gross acres in P.R. Springs and the Tar Sands Triangle within the State of Utah, for a total consideration of $3,000,000 In terms of a letter agreement dated April 17, 2020, due to uncertainty as to whether all of the 10 leases which the Company had initially paid deposits for are available, an adjustment to the purchase price has been agreed upon as follows: (i) should all 10 of the leases be available, the Company will pay the additional $1,093,000 for the rights under the leases; (ii) if only a portion of the leases ranging from 4 to 9 of the leases are available, the Company will adjust the final purchase price of the leases to between $1.5 million and $2.5 million; and (iii) notwithstanding the above, if after a period of 7 years from April 17, 2020, if at least six of the leases are not available to the Company, then the Company may demand a refund of $1.2 million or instruct the Seller to acquire other leases in the same area for up to $1.2 million.  
Entity Central Index Key 0001561180  
Entity Current Reporting Status Yes  
Entity Filer Category Non-accelerated Filer  
Document Period End Date Feb. 28, 2021  
Document Fiscal Year Focus 2021  
Document Fiscal Period Focus Q2  
Entity Small Business true  
Entity Emerging Growth Company true  
Entity Shell Company false  
Entity Ex Transition Period false  
Entity File Number 000-55991  
Entity Incorporation, State or Country Code A6  
Entity Interactive Data Current Yes