| 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, and in Jack County and Palo-Pinto County. Texas. The Company’s
production operations are all located in the State of Texas. On April 25, 2018, the Company incorporated
a Texas registered subsidiary, Norris Petroleum, Inc., as an operating entity. Basis of Presentation The accompanying financial statements of the
Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”)
and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited
financial statements and notes thereto contained in the Company’s annual report filed with the SEC on Form 10-K for the year
ended February 29, 2020. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for
a fair presentation of 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. The
Company’s consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and entities
in which the Company has a controlling financial interest. All significant inter-company accounts and transactions have been eliminated
in consolidation. Liquidity and Capital Considerations The accompanying consolidated financial statements
have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and
the satisfaction of liabilities in the normal course of business for the twelve-month period following the issuance date of these
consolidated financial statements. The Company’s business and operations
have been adversely affected by and are expected to continue to be adversely affected by the recent COVID-19 outbreak and may be
adversely affected in the future by other similar outbreaks. As a result of the recent COVID-19 outbreak,
including voluntary and mandatory quarantines, travel restrictions and other restrictions, the Company’s operations, and
those of its subcontractors, customers and suppliers, have and are anticipated to continue to experience delays or disruptions
and temporary suspensions of operations. In addition, the Company’s financial condition and results of operations have been
and are likely to continue to be adversely affected by the COVID-19 outbreak. The timeline and potential magnitude of the
COVID-19 outbreak is currently unknown. The continuation or amplification of this virus could continue to more broadly affect the
United States and global economy, including our business and operations, and the demand, for oil and gas. The Company has incurred continuing losses
since 2016, including a loss of $2,898,132 for the fiscal year ended February 29, 2020 and $443,575 for the six months ended August
31, 2020. During the six months ended August 31, 2020, the Company received $200,000 in funding from its credit line and incurred
cash losses of approximately $274,000 from its operating activities. As of August 31, 2020, the Company had $400,000 available
to borrow under its existing credit line with JBB Partners, Inc. (“JBB”), an affiliate of the Company’s Chief
Executive Officer, a cash balance of approximately $91,000 and negative working capital of approximately $193,000. As of the filing date of these financial statements, the Company
had $300,000 available to borrow under its existing line of credit with JBB. The Company’s principal capital and exploration
expenditures during next fiscal year are expected to relate to selected well workovers on its Jack and Palo Pinto County acreages.
The Company believes that it has the ability to fund its costs for such expenditures from cash on-hand and available funds from
its line of credit. In the event that the Company requires additional
capital to fund higher operational losses or oil and gas property lease purchases for fiscal year ending February 28, 2021, the
Company expects to seek additional capital from one or more sources via restricted private placement sales of equity and debt securities
from those other than JBB. However, there can be no assurance that the Company would be able to secure the necessary capital to
fund its costs on acceptable terms, or at all. If, for any reason, the Company is unable to fund its operations, it would have
to undertake other aggressive cost cutting measures and then be subject to possible loss of some of its rights and interests in
prospects to curtail operations and forced to forego opportunities or in worst case, cease operations . 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. Risks and Uncertainties The Company’s operations are subject
to significant risks and uncertainties, including financial, operational, technological, and other risks associated with operating
an emerging business, including the potential risk of business failure. Cash and Cash Equivalents The Company considers all highly liquid investments
purchased with an original maturity of one year or less to be cash equivalents. The Company has not experienced any losses on its
deposits of cash and cash equivalents . Oil and Gas Properties, Full Cost Method The Company follows the full cost method of
accounting for its oil gas properties, whereby all costs incurred in connection with the acquisition, exploration for and development
of petroleum and natural gas reserves are capitalized. Such costs include lease acquisition, geological and geophysical activities,
rentals on non-producing leases, drilling, completing and equipping of oil wells and administrative costs directly attributable
to those activities and asset retirement costs. Disposition of oil 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 and gas, in which case the gain or loss is recognized in the statement of operations. Depletion and depreciation of proved oil properties
are calculated on the units-of-production method based upon estimates of proved reserves. Such calculations include the estimated
future costs to develop proved reserves. Costs of unproved properties are not included in the costs subject to depletion. These
costs are assessed periodically for impairment. At the end of each quarter, the unamortized
cost of oil and 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. Costs in excess of the present value of estimated future
net revenues are charged to impairment expense. This limitation is known as the “ceiling test,” and is based on SEC
rules for the full cost oil and gas accounting method. The Company capitalizes pre-acquisition costs
directly identifiable with specific properties when the acquisition of such properties is probable. Capitalized pre-acquisition
costs are presented in the balance sheet. Equipment Equipment is stated at cost less accumulated
depreciation. Maintenance and repairs are charged to expense as incurred. Renewals and betterments which extend the life or improve
existing equipment are capitalized. Upon disposition or retirement of equipment, the cost and related accumulated depreciation
are removed and any resulting gain or loss is reflected in operations. Depreciation is provided using the straight-line method
over the estimated useful lives of the assets, which are 3 to 10 years. 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. Revenue Recognition 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. Share-based Compensation The Company estimates the fair value of each
share-based compensation award at the grant date by using the Black-Scholes option pricing model. The fair value determined represents
the cost for the award and is recognized over the vesting period during which an employee is required to provide service in exchange
for the award. Share-based compensation expense is recognized based on awards ultimately expected to vest. Excess tax benefits,
if any, are recognized as an addition to paid-in capital. Net Loss per Common Share Basic net loss per common share amounts are
computed by dividing the net loss available to the Company’s 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. The following table summarizes the common stock
equivalents excluded from the calculation of diluted net loss per since the inclusion of these shares would be anti-dilutive for
the three and six months ended August 31, 2020 and 2019:
2020 2019
Stock options - 1,440,000
Series A Convertible Preferred Stock 66,666,667 66,666,667
Convertible debt 14,500,000 12,000,000
Total common shares to be issued 81,166,667 80,106,667 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, 2020, $0 of the Company’s cash balances was uninsured. The Company has not experienced
any losses on such accounts. Recent Issued Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13,
Financial Instruments – Credit Losses (Topic 326), Measurement of Credit Losses on Financial Instruments The Company does not expect the adoption of
any other recently issued accounting pronouncements to have a significant impact on its financial position, results of operations,
or cash flows. Subsequent Events The Company has evaluated all transactions
through the date the consolidated financial statements were issued for subsequent event disclosure consideration. |
