| Organization, Nature of Operations and Summary of Significant Accounting Policies | Note 1 – Organization, Nature of Operations
and Summary of Significant Accounting Policies Norris Industries, Inc. (“NRIS”
or the “Company”) (formerly International Western Petroleum, Inc.), was incorporated on February 19, 2014 as a Nevada
corporation. The Company was formed to conduct operations in the oil and gas industry. The Company’s principal operating
properties are in the Ellenberger formation in Coleman County, Texas, and in the Jack and Palo-Pinto Counties, Texas. The Company’s
production operations are all located in the State of Texas. The accompanying unaudited interim financial
statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of
America and the rules of the Securities and Exchange Commission and should be read in conjunction with the audited financial statements
and notes thereto contained in the Company’s Annual Report on Form 10-K filed with the SEC for the year ended February 28,
2018. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation
of the financial position and the results of operations for the interim periods presented have been reflected herein. The results
of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the
unaudited interim financial statements that would substantially duplicate the disclosures contained in the audited financial statements
for the most recent fiscal year as reported in the Form 10-K have been omitted. Use of Estimates The preparation of financial statements in
conformity with accounting principles generally accepted in the United States of America requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
as of the date of the financial statements and the reported amounts of revenues and expense during the period. Actual results could
differ from those estimates. Concentrations of Credit Risk Financial instruments which potentially subject
the Company to concentrations of credit risk include cash deposits placed with financial institutions. The Company maintains its
cash in bank accounts which, at times, may exceed federally insured limits as guaranteed by the Federal Deposit Insurance Corporation
(“FDIC”). At August 31, 2018, $0 of the Company’s cash balances were uninsured. The Company has not experienced
any losses on such accounts. Cash and Cash Equivalents The Company considers all highly liquid investments
purchased with an original maturity of the year or less to be cash equivalents. The Company has not experienced any losses on its
deposits of cash and cash equivalents . Accounts Receivable Accounts receivable typically consist of oil
and gas receivables. The Company has classified these as short-term assets in the balance sheet because the Company expects repayment
or recovery within the next 12 months. The Company evaluates these accounts receivable for collectability considering the results
of operations of these related entities and when necessary records allowances for expected unrecoverable amounts. To date, no allowances
have been recorded. Oil & Gas Properties The Company follows the full cost method of
accounting for its investments in oil and gas properties, whereby all costs incurred in connection with the acquisition, exploration
for and development of petroleum and natural gas reserves, including unproductive wells, are capitalized. Such costs include lease
acquisition, geological and geophysical activities, rentals on non-producing leases, drilling, completing and equipping of oil
and gas wells and administrative costs directly attributable to those activities, and asset retirement costs. General and administrative
costs related to production and general overhead are expensed as incurred. Dispositions of oil and gas properties are
accounted for as a reduction of capitalized costs, with no gain or loss recognized unless such adjustment would significantly alter
the relationship between capital costs and proved reserves of oil, in which case the gain or loss is recognized in the statement
of operations. Future development, site restoration, dismantlement
and abandonment costs, are estimated property by property, based upon current economic conditions and regulatory requirements,
and are included in amortization of our oil and natural gas property costs. Depletion of capitalized oil properties and
estimated future development costs, excluding unproved properties, are based on the unit-of-production method based on proved reserves. At the end of each quarter, the unamortized
cost of oil and natural gas properties, net of related deferred income taxes, is limited to the sum of the estimated future after-tax
net revenues from proved properties, after giving effect to cash flow hedge positions, discounted at 10%, and the lower of cost
or fair value of unproved properties, adjusted for related income tax effects. This limitation is known as the “ceiling test,”
and is based on SEC rules for the full cost oil and gas accounting method. There was no ceiling test write-down recorded during
the six months ended August 31, 2018 and 2017. The Company assesses the carrying value of
its unproved properties for impairment periodically. If the results of an assessment indicate that an unproved property is impaired
(which was assessed in connection with the Company’s evaluation of goodwill impairment), then the carrying value of the unproved
properties is added to the proved oil property costs to be amortized and subject to the ceiling test. Asset Retirement Obligations If a reasonable estimate of the fair value
of an obligation to perform site reclamation, dismantle facilities or plug and abandon wells can be made, the Company will record
a liability (an asset retirement obligation or “ARO”) on its consolidated balance sheet and capitalize the present
value of the asset retirement cost in oil and gas properties in the period in which the retirement obligation is incurred. In general,
the amount of an ARO and the costs capitalized will be equal to the estimated future cost to satisfy the abandonment obligation
assuming the normal operation of the asset, using current prices that are escalated by an assumed inflation factor up to the estimated
settlement date, which is then discounted back to the date that the abandonment obligation was incurred using an assumed cost of
funds for the Company. After recording these amounts, the ARO will be accreted to its future estimated value using the same assumed
cost of funds and the capitalized costs are depreciated on a unit-of-production basis over the estimated proved developed reserves.
Both the accretion and the depreciation will be included in depreciation, depletion and amortization expense on our consolidated
statements of operations. Revenue Recognition ASU 2014-09, “Revenue from Contracts
with Customers (Topic 606)” Revenue
Recognition (Topic 605) The Company’s revenue is comprised entirely
of revenue from exploration and production activities. The Company’s oil is sold primarily to wholesalers and others that
sell product to end use customers. Natural gas is sold primarily to interstate and intrastate natural-gas pipelines, various end-users,
local distribution companies, and natural-gas marketers. NGLs are sold primarily to various end-users. Payment is generally received
from the customer in the month following delivery. Contracts with customers have varying terms,
including spot sales or month-to-month contracts, or contracts with a finite term, where the production from a well or group of
wells is sold to one or more customers. The Company recognizes sales revenues for oil, natural gas, and NGLs based on the amount
of each product sold to a customer when control transfers to the customer. Generally, control transfers at the time of delivery
to the customer at a pipeline interconnect, the tailgate of a processing facility, or as a tanker lifting is completed. Revenue
is measured based on the contract price, which may be index-based or fixed, and may include adjustments for market differentials
and downstream costs incurred by the customer, including gathering, transportation, and fuel costs. Revenues are recognized for the sale of the
Company’s net share of production volumes. Sales on behalf of other working interest owners and royalty interest owners are
not recognized as revenues. The Company does not hedge nor forward sell any of its current production via derivative financial
contracts. Income Taxes Income taxes are accounted for in accordance
with the provisions of ASC Topic No. 740. Deferred tax assets and liabilities are recognized for the future tax consequences attributable
to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which
those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change
in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are established, when
necessary, to reduce deferred tax assets to the amounts expected to be realized. Stock-Based Compensation The Company measures stock-based compensation
cost at the grant date based on the fair value of the award and recognize it as expense, over the vesting or service period, as
applicable, of the stock award. Basic and Diluted Net Income (Loss) per
Common Share Basic net loss per common share amounts are
computed by dividing the net loss available to the Company’s common shareholders by the weighted average number of common
shares outstanding over the reporting period. In periods in which the Company reports a net loss, dilutive securities are excluded
from the calculation of diluted earnings per share as the effect would be anti-dilutive. For the six months ended August 31, 2018,
the Company’s potentially dilutive shares, which include outstanding common stock options representing 1,440,000 common stock
equivalents have not been included in the computation of diluted net loss per share as the result would have been anti-dilutive.
The Company did not have any potentially dilutive shares for the six months ended August 31, 2017. Subsequent Events On October 11, 2018, the Company entered into
an amendment of its promissory note to JBB to extend the maturity date to December 31, 2019. Recently Adopted Accounting Pronouncements See discussion of the adoption of ASU 2014-09,
“Revenue from Contracts with Customers (Topic 606)” In August 2016, the Financial Accounting Standards
Board (“FASB”) Accounting Standards Update (“ASU”) 2016-15, “Statement of Cash Flows (Topic 230):
Classification of Certain Cash Receipts and Cash Payments” In November 2016, the FASB issued ASU 2016-18,
“Statement of Cash Flows (Topic 230)” In August 2017, the FASB issued ASU 2017-09,
Modification Accounting for Share-Based Payment Arrangements Recently Issued Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02,
Leases In September 2016, the FASB issued ASU 2016-13,
Financial Instruments-Credit Losses The Company does not expect the adoption of
recently issued accounting pronouncements to have a significant impact on its financial position, results of operations or cash
flows. |
