Item 4.02 Failure to Use Previously Published Financial Statements or Related Audit Report or Interim Review Completed.

At July 16, 2021, the independent members of the audit committee (with Mr. Alex blyumkin abstaining, the “Audit Committee”) of the Board of Directors of
Énergie Petroteq inc. (the “Company”), after discussion with the Company’s Chief Financial Officer, has concluded that:

1. The previously published financial statements of the Company (the “periodic financial statements”) contained in the following periodic reports should no longer be relied upon:

(a) the annual reports of the Company (each, an “Annual Report”) on Form 10-K for the years ended August 31, 2019 and August 31, 2020, originally filed on
December 16, 2019 and December 15, 2020, respectively;

(b) Amendment n ° 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

2.the unaudited condensed consolidated financial statements of the Company for the three and six months ended February 28, 2019 and 2018 (as well as the periodic financial statements, the “financial statements”), contained in the following documents should no longer be relied on:

(a) The company’s registration statement (the “Registration Statement”) on Form 10 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), filed on May 22, 2019;

(b) Amendment n ° 1 to the registration declaration, filed on June 24, 2019; and

(c) Amendment n ° 2 to the Declaration of Registration, filed on July 5, 2019.

The Board of Directors endorsed the conclusions of the Audit Committee.

The Company had issued a guaranteed note dated Dec. 27, 2018 (the “Ticket”) payable at Redline Capital Management SA (“Redline”) of the principal amount of $ 6,000,000, maturing 24 months after its date of issue, and bearing interest at the rate of 10% per annum on the basis of a year of 360 days. The obligations of the Company under the Note are purportedly secured by a guarantee 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, under a security agreement between the parties dated Dec. 27, 2018 (the “Security Agreement”).

The note had been issued pursuant to the terms of a settlement agreement between the parties dated Dec. 27, 2018 (the “Settlement Agreement”) which was intended to settle certain claims made by Redline against the Company. Shortly after the settlement agreement, in early 2019, Mr. Alex blyumkin, executive chairman of the company, indicated that he has undertaken an internal review of the claims made by Redline and has concluded that the Settlement Agreement, Note and Warranty Agreement are void and unenforceable, and that they do not ‘did not have to be disclosed to the Board of Directors or to the Chief Financial Officer of the Company. Mr. Blyumkin indicated that he had verbally informed Redline that the Company now considers the Settlement Agreement, and therefore the Note and the Guarantee Agreement, to be void and unenforceable. However, no action has been taken to document this position. Since the maturity of the Security, the December 27, 2020, Redline did not file any legal action to compel payment for the ticket.

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In response to a request from staff at Security and Trade Commission, Mr. Blyumkin determined that it was appropriate to submit the Settlement Agreement, Memorandum and Guarantee Agreement for review by the Chief Financial Officer of the Company and the Audit Committee, and, in particular, to review its conclusion that they did not have to be disclosed in the Declarations. The Audit Committee determined that, notwithstanding the results of the internal review of Redline’s complaints undertaken by Mr. Blyumkin in early 2019, the settlement agreement, memo and security agreement should have been disclosed, and the obligations referred to in the memo should have been disclosed in the financial statements, regardless of the company’s position on their validity and enforceability.

The Company intends to file restatements to its periodic financial statements, and to amend and restate other information in the relevant periodic reports, as appropriate. Restatements may have an impact on the losses of the Company previously disclosed in the periodic financial statements, and related information and the MD&A and analysis of financial condition and results of operations. In this regard, the Audit Committee intends to retain the services of legal counsel to undertake a review of the Settlement Agreement, the Note and the Security Agreement to determine if they are enforceable (and, in particular, whether the Guarantee Agreement properly allocated the right, title and interest of the Company in the oil and gas leases as personal property, and whether any security allegedly granted under the security agreement have been completed under applicable law), and whether the related liability should be classified as an actual or contingent liability.

The Company will not be able to file its quarterly report on Form 10-Q (and associated certifications) for the period ended. May 31, 2021 (the “Documents”) until it has completed the scheduled restatements of the Periodic Financial Statements, which is expected to take several weeks – well beyond the extended filing deadline of July 20, 2021 prescribed by Rule 12b-25 (b) (2) (ii) of the Exchange Act and the deadline for filing July 30, 2021 prescribed under Canadian Regulation 51-102 respecting Continuous Disclosure Obligations.

The Audit Committee has discussed with Hay & Watson, Chartered Professional Accountants, the Company’s registered independent public accounting firm, the matters disclosed in this report. Hay & Watson has received a copy of the disclosures made herein and has had an opportunity, on or before the day of filing of this 8-K, to review such disclosures and provide us with a letter indicating whether they agree. or not with these disclosures. A copy of the letter from Hay & Watson is attached hereto as Exhibit 7.01, and which is incorporated herein by reference.

Management assesses the effect of the restatements on the Company’s internal control over financial reporting and on its disclosure controls and procedures. The Company expects to report one or more material weaknesses after completing its investigation into the cause of these restatements. A material weakness is an deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement in a company’s annual or interim financial statements exists. is not avoided or detected in a timely manner. The existence of one or more material weaknesses prevents management from concluding that a company’s disclosure controls and procedures and internal control over financial reporting are effective. In addition, the Audit Committee, the Board of Directors and management have started to assess the appropriate corrective actions. The Company’s remediation plans and changes to internal control over financial reporting will be disclosed in its future periodic filings.

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Article 8.01 Other events

The Company will inform the staff of the Ontario Securities Commission on its expected delay in filing the Documents and will contact the Ontario Securities Commission in accordance with part 4 of national policy 12-203 – Cessation of management Trade orders (“NP 12-203”) for a cessation of management Trade order ?? (“MCTO”) pending filing of the Documents, which MCTO will prohibit management of the Company from “trading in the securities of the Company until the Documents are filed. No decision has yet been taken by the Ontario Securities Commission on this app. Ontario Securities Commission may grant the request and issue the termination of management Trade order or it may impose a cease trade order on the issuer if the? Documents are not filed by July 30, 2021. The Company will adhere to the alternative disclosure guidelines set out in section 9 of NP 12-203 and will file default status reports every two weeks in the form of press releases. The Company intends to file the Documents on or about September 10, 2021.?

If an MCTO is issued, during the period of default and until filing of documents, the Company intends to “comply with the provisions of the ‘Alternative Disclosure Guidelines’ set out in NP 12-203, including the “Requirement to file bi-weekly status reports in the form of press releases containing prescribed update information.” There is no guarantee that an MCTO will be issued. Until the Company has filed the Documents, members of the management of the Company and other insiders are subject to an insider trading blackout in accordance with its internal policy on insider trading and declaration. The Company confirms that, other than as disclosed in previous press releases and material change reports, there has been no material business development since filing with the CSA on April 20, 2021 the last? Company Quarterly Report on Form 10-Q for the period ended February 28, 2021.

The Company is not currently the subject of any insolvency proceedings. If the Company provides information “to any of its creditors during the period in which it is in default of filing documents, the Company confirms” that it will also file material change reports on SEDAR containing the required information, and that it will file regular reports with the SECOND on Form 8-K, if applicable.?

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Item 9.01 Financial statements and supporting documents

(d) Exhibitions

7.01 Letter of non-confidence from Hay & Watson in accordance with section 4.02 (b) of the form

8-K, dated July 16, 2021.

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